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 32322026 Benefits Benchmarks: Key Insights for Enterprise Employershttps://www.sequoia.com/2026/04/2026-enterprise-benefits-benchmarks-key-takeaways/

Wed, 29 Apr 2026 20:14:12 +0000https://www.sequoia.com/?p=64818Key takeaways from Sequoia’s 2026 Benefits Benchmarking Report, Enterprise Edition, highlighting healthcare, wellbeing, leave, and retirement trends shaping employer decisions.

The post [2026 Benefits Benchmarks: Key Insights for Enterprise Employers](/content/2026/04/2026-enterprise-benefits-benchmarks-key-takeaways/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

How are large employers designing benefits programs in 2026?

The answer matters because the stakes are high. Benefits decisions shape long‑term costs, employee experience, and compliance — especially at enterprise scale. As organizations grow, even small program changes can have an outsized impact, making market context a material input to benefits planning.

To help VC‑ and PE‑backed companies with 500 or more employees understand how they compare to peers — and inform planning for 2027 — **Sequoia’s 2026 Benefits Benchmarking Report: Enterprise Edition** examines how large employers are approaching healthcare, leave, retirement, and wellbeing programs.

Below, we highlight key insights from the report that show where enterprise benefits strategies are holding steady, where they’re adjusting, and how many organizations are fine tuning programs in response to sustained cost pressure.

_If you’re interested in getting your company’s benefits programs benchmarked against the full data set, [connect with a Sequoia advisor](/content/lp/employee-benefits-benchmarking/index.html) for a complimentary consultation._

## 2026 Healthcare Benchmarks

Cost containment remains the dominant focus in workforce benefits. Rather than pursuing large scale plan redesigns, employers are concentrating efforts on the fastest growing cost drivers, including weight-management medications and specialty pharmacy.

### Here’s how that shows up in the data:

**Health plan priorities**: In 2026, 82% of employers cited cost reduction as a focus, up from 73% the year before. Attention to affordability also increased, rising from 26% to 32%. This reflects a market still mindful of employee cost pressure, with tighter budget oversight shaping health plan decisions.

**Affordability Strategies**: Employers are taking more steps to address affordability, but most are doing so selectively and without committing to broad or permanent cost increases. Those reporting no affordability actions fell from 58% to 49%. Among those taking action, lowering employee contributions is the most common approach (24%).

**Cost-reduction strategies**: Efforts to manage costs extend beyond employee contribution changes. Employers planning to add voluntary benefits increased from 22% to 31%, and those considering pharmacy carve outs rose from 19% to 24%. At the same time, fewer employers are sunsetting low use programs, declining from 31% to 28%. Overall, employers are spreading cost pressure across plan design, vendor structure, and program mix, rather than relying on a single approach.

**Pharmacy clinical management practices**: Employers are expanding utilization management (including prior authorization, step therapy, or quantity limits that guide appropriate use) to control pharmacy spend. Adoption more than doubled year over year, rising from 24% to 56%. Clinical management of GLP 1 drugs also expanded, increasing from 20% to 36%.

**Self-funding**: Adoption is accelerating. Compared to last year, medical and pharmacy self funding increased from 36% to 53%, while dental rose from 45% to 52%. This highlights employers’ growing comfort with more financial risk in core health plans.

### Explore the benchmarks

## 2026 Leave Program Benchmarks

Leave strategies are becoming more streamlined. Instead of introducing new leave types, most employers are refining existing policies to meet compliance demands and reduce administrative burden\[D\
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While approaches vary by organization, the broader direction is consistent. Employers are moving toward benefits that are easier to manage and explain, and more intentional in how they deliver value.\
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### Here’s how that shows up in the data:\
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**Policy drivers in the next 12 months**: Leave strategy is increasingly shaped by compliance and cost considerations. Regulatory and compliance requirements rose from 44% to 54%, while budget considerations increased from 34% to 41%. This points to a leave agenda focused on manageability and policy discipline, rather than expansion.\
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**Challenges**: Leave administration is the most often cited challenge, noted by 68% of employers. While intermittent leave challenges declined from last year to 47%, the overall operational burden remains high. Balancing business needs is cited by 47%, while coordinating short-term disability (STD), long-term disability (LTD), and company leave is a challenge for 43%.\
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**Program priorities**: Redesigning or simplifying existing leave policies ranks highest at 39%, while 33% of employers expect to make no major changes. Few employers are expanding scope — only 10% plan to add new leave benefits, and 7% expect to broaden eligibility.\
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**Parental leave policy structure**: To manage costs, most employers deliver paid parental leave through STD with an employer top up rather than funding it entirely outside disability coverage. This approach is used by 74\[DH3.1\]% of employers. Among employers offering paid parental leave, 87% replace 100% of salary.\
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### Explore the benchmarks\
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## 2026 Retirement Program Benchmarks\
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Retirement benefits continue to mature steadily. Employer matching, automatic features, and incremental plan design refinements are becoming more common, signaling long term investment rather than rapid change.\
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### Here’s how that shows up in the data:\
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**Plan design features**: Roth 401(k) access is nearly universal at 98%, and about half of employers offer additional after tax contributions. The clearest area of change is self directed brokerage access, which increased 7% to 41%. This suggests employers are expanding flexibility for more engaged savers without altering core plan design.\
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**Automatic enrollment**: To boost participation, companies continue to adopt automatic enrollment, which is used in 73% of plans\[DH4.1\]. Default contribution rates are also holding steady: 51% set defaults at 5% or higher, and the share using defaults above 6% increased 7% to 30%.\
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**Matching contributions**: Match prevalence remains high at 82%. The most notable change is how matches are delivered. True up provisions increased 7% to 65%. This reflects a focus on predictability for employees, rather than simply increasing match generosity.\
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**Match effective rates**: The center of the market is a 3% to 4% effective match, with both levels cited by 34% of employers. However, plans offering a 5% or higher effective match increased 11% to 24%, indicating a widening distribution.\
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### Explore the benchmarks\
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## 2026 Wellbeing Benefits Benchmarks\
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Employers are expanding wellbeing programs more selectively. They’re maintaining offerings that show clear value while placing greater emphasis on utilization, structure, and measurable outcomes.\
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### Here’s how that shows up in the data:\
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**Program adjustments**: Wellbeing is still a core part of benefits strategies. In 2026, 69% of employers report no change to their programs, while 28% are adding initiatives and only 3% are reducing scope. Rather than broad pullbacks, employers are investing in progams where employee value is the clearest.\
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**ROI metrics**: Employers are sharpening how they measure wellbeing programs. Utilization leads the way at 92%, but employee feedback is gaining ground, increasing from 83% to 90%. This reflects a growing focus on how these programs actually shape the employee experience.\
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**Wellbeing benefits categories**: Wellbeing offerings are broadening as employers pair mental health support with benefits employees can use regularly. Emotional support is the most common category at 88%, while physical wellbeing programs increased from 74% to 81%.\
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### Explore the benchmarks\
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## Benchmark Your Benefits Against the Enterprise Market\
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The insights highlighted here represent just a part of what’s included in **Sequoia’s 2026 Benefits Benchmarking Report, Enterprise Edition**. The full report provides deeper enterprise level benchmarks across healthcare, leave, retirement, and wellbeing, including:\
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- Plan offerings and requirements\
- Family forming benefits\
- Disability programs\
- Self funding and stop loss coverage\
- Leave policy structures and durations\
- Retirement participation, vesting, and matching\
- Wellbeing program offerings and priorities\
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For benefits leaders making high stakes decisions, benchmarking provides the context needed to pressure test programs, validate tradeoffs, and plan what comes next with confidence. **Connect with a Sequoia advisor for a [complimentary benefits benchmarking consultation](/content/lp/employee-benefits-benchmarking/index.html) based on our latest data**.\
\
The post [2026 Benefits Benchmarks: Key Insights for Enterprise Employers](/content/2026/04/2026-enterprise-benefits-benchmarks-key-takeaways/index.html) appeared first on [Sequoia](/content/site-root.html).\
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\]\]>New Mexico Vaccine Purchase Act: What Employers Should Know for the 2026 Reporting Cyclehttps://www.sequoia.com/2026/04/new-mexico-vaccine-purchase-act-what-employers-should-know-for-the-2026-reporting-cycle/

Tue, 28 Apr 2026 14:27:20 +0000https://www.sequoia.com/?p=64792Many states require group health plans to periodically report on covered lives and pay assessments based on the number of individuals covered within the state. These assessments fund state initiatives, most commonly public health programs, such as childhood immunization efforts.

The post [New Mexico Vaccine Purchase Act: What Employers Should Know for the 2026 Reporting Cycle](/content/2026/04/new-mexico-vaccine-purchase-act-what-employers-should-know-for-the-2026-reporting-cycle/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Many states require group health plans to periodically report on covered lives and pay assessments based on the number of individuals covered within the state. These assessments fund state initiatives, most commonly public health programs, such as childhood immunization efforts.

While insurance carriers or third‑party administrators (TPAs) often manage these requirements, employers should be aware that many state laws apply directly to the group health plan and plan sponsor. As a result, employers sponsoring both fully insured and self-funded plans should actively confirm that required filings and payments are being completed on the plan’s behalf.

**Overview of the New Mexico Vaccine Purchase Act Requirement**

Under New Mexico Administrative Code 13.10.40 NMAC, every health insurer and group health plan that provides coverage to New Mexico residents is required to annually report to the New Mexico Office of the Superintendent of Insurance (NM OSI) the number of insured children who:

- Are New Mexico residents, and
- Were under age 19 as of December 31 of the prior calendar year

This requirement applies regardless of where the employer is headquartered and may include employers located outside of New Mexico if their plan covers New Mexico residents.

Each filing must include a report and an attestation and is required even when the total number of reportable lives is zero.

Separately, reporting is based on a snapshot as of December 31, of the prior calendar year. If an employee terminated health coverage at any time during the reporting year (2026), the covered entity must still report the number of insured children under age 19 who were insured on December 31, 2025.

**What’s Changing for the 2026 Filing**

The underlining reporting requirement itself has not changed for the 2026 filing. NM OSI continues to collect required information through its Vaccine Purchasing Act (OSIVPA) [portal](https://vpa.osi.state.nm.us/login), which identifies reporting responsibility at the covered-entity (employer or insurer) level.

_Self-funded/level-funded plans:_

NM OSI permits reporting to be completed by a carrier or TPA acting on behalf of a group health plan. Historically, carriers or TPAs have completed this reporting on behalf of self‑funded (and level funded plans). However, several insurers have recently informed self-funded (including level funded) employers that they do not intend to submit Vaccine Purchase Act filings or remit assessments on the employer’s behalf for the 2026 reporting cycle, which covers calendar year 2025 data. This change is due to NM OSI no longer accepting aggregated plan data submissions.

_Fully insured plans:_

For fully insured plans, carriers typically perform the reporting and payment functions. However, because the requirement applies to both insurers and group health plans, employers should still confirm that the carrier will complete the filing.

As a result, some or all reporting and payment responsibility may shift directly to the employer as plan sponsor, depending on the carrier or TPA’s position.

**Key Deadlines and Penalties**

- Filing portal opens: May 1, 2026
- Filing deadline: July 1, 2026
- Late filing penalty: $500 per day

NM OSI has indicated that **extensions are not granted**.

**Information Typically Needed to File**

Entities responsible for reporting should expect to provide:

- FEIN numbers for all covered entities being reported
- Legal business name associated with each FEIN
- Primary and alternate contact information including names, job titles, addresses, emails, and phone numbers
- The number of covered lives

**How to Submit:**

All filings must be submitted through the State of New Mexico OSI Vaccine Purchasing Act (OSIVPA) portal, accessible on the NM OSI website. Additional information and filing guidance are available on the [Vaccine Purchasing Act – NM OSI](https://www.osi.state.nm.us/en/insurance-professionals/life-and-health-division/resource-binder/vaccine-purchasing-act/) webpage.

**Employer Takeaway**

Employers sponsoring group health plans, both fully insured and self-funded (including level funded) should take proactive steps in anticipation of the upcoming July 1, 2026 deadline by contacting their insurance carriers or TPAs to confirm:

- Whether the carrier or TPA will submit the New Mexico Vaccine Purchase Act report and pay any associated assessment, or
- Whether responsibility will rest with the employer as plan sponsor.

**Additional Resources**

- [Vaccine Purchase Act FAQs](https://www.nmhealth.org/publication/view/help/8977/)
- [New Mexico Vaccine Purchasing Act User Guide](https://www.osi.state.nm.us/wp-content/uploads/2026/04/2026-New-Mexico-Vaccine-Purchasing-Act-User-Guide-V3.pdf)

[Connect with a Sequoia consultant](/content/form/consultation/index.html) to learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions. And if you’re already a Sequoia client, stay on top of your employer obligations with [your Compliance Checklist](https://admin.sequoia.com/connect) that highlights important compliance dates, action items, and resources.

_The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog. © 2026 Sequoia Consulting Group. All Rights Reserved._

\]\]>The Human + AI Equation: Forging the Next Era of Workhttps://www.sequoia.com/2026/04/human-ai-equation-redefining-productivity/

Wed, 22 Apr 2026 19:25:07 +0000https://www.sequoia.com/?p=64682How leaders can redefine productivity with AI using outcome-based models.

The post [The Human + AI Equation: Forging the Next Era of Work](/content/2026/04/human-ai-equation-redefining-productivity/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

As AI-enabled productivity and redesigned talent systems come together, companies are looking at their people spend differently. It’s not just a story about how to “do more with less.” It’s about building a company that learns faster, adapts and unlocks more leverage from every dollar spent.

What we heard from leaders at [Transform 2026](http://www.transform.us/) is that we’re at an inflection point, and there are concrete steps leaders can take now to adapt.

## AI Changes Core Capabilities

On the hype-to-impact curve, we have moved past the initial wave of experimentation. Pilots, prototypes and isolated use cases are no longer the edge of innovation. AI no longer sits within a single function or team. It is now in the center of operating models, workforce design and leadership norms.

Companies that treat AI as a core capability rather than a side project will have fundamentally different cost structures, decision cycles and talent expectations than those that do not. Access to the best tools is no longer a moat. The real competitive advantage will be the ability to scale new employee behaviors, redesign work and build cultures that are comfortable continuously evolving how work gets done. AI fluency, data-driven decision-making, and new operating practices must be embedded across teams and levels.

As AI becomes operationally unavoidable and adoption increases, productivity takes on a new meaning.

## From Headcount to Outcomes

As AI becomes central to the operating model, the way companies define and measure productivity is being reshaped. Legacy metrics like headcount ratios, capacity planning and utilization assume work is linear and labor is the primary constraint. In an AI-enabled environment, those assumptions break down. Productivity is no longer about how busy teams are or how efficiently roles are filled. It is about the value created relative to the total investment in people, tools and automation.

The core question shifts to outcomes: What impact are we generating for every dollar we spend on human talent? Answering that question requires rethinking not just execution, but the systems that govern how work is funded, designed and scaled.

This shift shows up first in how leaders allocate resources. Rather than locking in annual budgets based on static forecasts, companies are moving toward shorter budget cycles that prioritize experimentation and learning. Teams are funded for a quarter at a time, results are evaluated based on measurable impact, and resources are quickly reallocated toward what works. Productivity, in this model, is tied to learning speed and adaptability, not plan adherence.

Execution models are changing as well. Low-code and no-code tools allow business operators to design and refine workflows without relying entirely on engineering capacity. As automation becomes easier to deploy, productivity gains come less from doing the same work faster and more from eliminating work entirely or reallocating effort toward higher-value activities like judgment, creativity and relationship-building.

Team design is evolving alongside these shifts. Instead of organizing around fixed roles with predefined responsibilities, leaders are increasingly organizing around outcomes. Each open role becomes a design choice. The question is no longer who should fill an existing job, but how the work itself should change given current AI capabilities, tools and strategic priorities. Productivity is measured by impact delivered, not by role consistency or tenure.

Taken together, these changes point to a new productivity paradigm. Success is defined by impact per dollar, the ability to adapt as tools evolve, and how quickly organizations can learn what drives results. Leaders who update their productivity lens along with their technology investments will be far better positioned to turn AI into a durable operating advantage.

## Redefining Productivity: The First Steps

Redefining productivity does not require a multi-year transformation program. It is a leadership choice that only becomes real when it shows up in daily workflows.

Doing these four things first can turn intent into evidence.

### 1\. Diagnose so you know where leverage lives.

Map the top five workflows where AI could meaningfully improve outcomes in your business. For each workflow, define clear success metrics by function, such as cycle time, error rate, revenue impact, customer satisfaction or cost per transaction.

### 2\. Enable people to use tools responsibly and effectively.

Update hiring criteria and internal assessments to include AI usage and durable skill rubrics. Pilot AI-assisted evaluations in which managers assess both what was delivered and how effectively AI tools were used.

### 3\. Measure so learning drives real budget and priority shifts.

Tie budget release to observed impact. Fund experiments in short cycles, track results rigorously, and revisit decisions quarterly. Double down where AI-enabled workflows demonstrably improve outcomes.

### 4\. Scale so wins become institutional.

When something works, productize it. Turn isolated wins into repeatable playbooks and embed them into systems, templates, and training so they become the new normal.

## Looking Ahead

The next era of work is not just about adapting faster or extracting more leverage from people spend. It is about deliberately redesigning how companies learn, build trust and deliver value, with AI as a core enabler rather than the entire story.

The companies that move with intention now will not be reacting to new standards in 2027. They will be the ones defining them.

Explore how Sequoia helps companies build people strategies that keep pace with change. Talk to an advisor [here](/content/form/consultation/index.html).

\]\]>Employers Are Investing in Mental Health, But Outcomes Remain Unclearhttps://www.sequoia.com/2026/04/mental-health-metrics-employer-strategy-2026/

Mon, 20 Apr 2026 13:00:50 +0000https://www.sequoia.com/?p=64549Employers are investing heavily in mental health, but many aren’t sure it’s working. See what Sequoia’s latest data reveals about the gap.

The post [Employers Are Investing in Mental Health, But Outcomes Remain Unclear](/content/2026/04/mental-health-metrics-employer-strategy-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Mental health has become a permanent pillar of employer wellbeing strategy. Since 2020, organizations have expanded access at record speed, adding therapy, apps, coaching, and specialized support programs to meet employee needs.

But in 2026, a sobering question remains: Is it actually working?

Findings from Sequoia’s 2026 Wellbeing Trends Report suggest a growing disconnect between investment and confidence. Employers are spending more and offering more, but most still aren’t sure whether employee mental health has improved.

To help answer this, we’ll look at Sequoia’s latest data. Below are the top mental health insights shaping employer strategy this year and what they signal for the road ahead.

## The Confidence Problem No One Planned For

When we asked employers whether overall employee mental health at their organization has improved in the last year, the dominant response was uncertainty.

Nearly three-quarters of employers say they aren’t sure whether their mental health strategy is working.

This isn’t due to a lack of action. Most organizations have invested heavily since the pandemic, layering programs on top of existing benefits to meet urgent and evolving needs. What many didn’t have was the time or the infrastructure to step back and design a cohesive strategy or define what success should look like.

Now, several years later, that early momentum has given way to doubt. Employers know whether what they’re providing is enough, or whether it’s effective.

That uncertainty is closely tied to how mental health benefits have evolved.

## When More Solutions Create Less Clarity

Today’s mental health ecosystem at most companies is crowded. Most employers now offer multiple mental health solutions inclusive of enhanced EAP-sponsored therapy sessions, mindfulness and meditation apps, and digital coaching platforms. In fact, 63% of employers offer two to three different mental health vendors, and 5% offer four or more.

For employees, this often shows up as confusion: multiple apps, unclear distinctions between programs, and uncertainty about where to start. For employers, it shows up as fragmented data and a limited ability to see how all these solutions add up.

The result is paradoxical. As mental health offerings have expanded, confidence in their collective impact has eroded.

## The Limits of Measuring What’s Easy

Measurement plays a central role in this confidence gap.

Most employers track mental health utilization — registrations, logins, session counts — largely because vendors make this data readily available. But utilization alone offers a narrow view. It shows that something was used, not whether it helped.

Nearly half of employers admit they aren’t tracking mental health metrics beyond basic usage. Very few are measuring clinical outcomes, claims, or broader indicators like absenteeism and productivity.

What stands out in the data is that employers who do look beyond utilization — measuring outcomes or claims patterns — are far more likely to believe employee mental health is improving. Insight, it turns out, precedes confidence.

## Why 2026 Feels Like a Turning Point

As employers plan for the year ahead, many are pausing rather than pushing forward aggressively. Almost half report no specific mental health priorities for 2026. Among those who do, the focus is telling: stigma reduction, manager enablement, and stronger demands for outcome data.

These priorities reflect the broader reality employers are navigating, including economic uncertainty, rising medical costs, and increased pressure to demonstrate ROI. Mental health still matters deeply, but leaders are being asked to justify how investments translate into meaningful impact.

Increasingly, the path forward looks less like adding something new and more like making what already exists work better together.

## Explore the Full Data Behind the Shift

This narrative is just one slice of the insights in Sequoia’s 2026 Wellbeing Trends Report. The report also examines how employers are navigating GLP‑1 coverage, responding to a challenging renewal environment, and approaching AI in wellbeing.

[Download the full report](/content/reports/2026-wellbeing-trends/index.html) to explore what employers are doing and where wellbeing strategies are headed next.

\]\]>What Lilly’s Employer Connect Means for GLP-1 Coverage Decisionshttps://www.sequoia.com/2026/04/lilly-employer-connect-glp-1-coverage-governance/

Wed, 15 Apr 2026 13:23:43 +0000https://www.sequoia.com/?p=64432Lilly’s Employer Connect brings manufacturers closer to GLP 1 coverage decisions. What HR and finance teams need to know about cost discipline and oversight.

The post [What Lilly’s Employer Connect Means for GLP-1 Coverage Decisions](/content/2026/04/lilly-employer-connect-glp-1-coverage-governance/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Eli Lilly’s recent launch of its Employer Connect platform has been widely covered as another development in the GLP-1 conversation. But this isn’t simply a story about obesity medications. It reflects a shift in how access to high-cost therapies is structured, financed, and governed.

Lilly introduced [Employer Connect](https://investor.lilly.com/news-releases/news-release-details/lilly-employer-connect-platform-launches-over-fifteen?utm_source=chatgpt.com) as a direct-to-employer platform designed to help companies expand coverage of its obesity drug Zepbound through defined pricing pathways and third-party administrative partnerships. Rather than relying exclusively on traditional [pharmacy benefit manager (PBM)](/content/2025/05/how-to-choose-the-optimal-pharmacy-benefit-partner/index.html) contracting structures, the company is engaging employers more directly around how access is structured.

This isn’t primarily a pricing story. It’s a control and governance story. For employers, this introduces [new pathways for access](https://www.fiercehealthcare.com/payers/eli-lilly-launches-its-direct-employer-platform-obesity-drugs?utm_source=chatgpt.com), new complexity in cost oversight, vendor alignment, and long-term financial accountability.

For HR and benefits leaders, that shift deserves attention.

## Why This Is Happening Now

Several forces are converging.

[GLP-1 medications](/content/2025/11/employer-questions-about-glp-1/index.html) have moved firmly into mainstream employer strategy, with [approximately 25% of employers](/content/2026/03/glp-1-coverage-trends-2026/index.html) reporting coverage for weight loss and adoption significantly higher among larger organizations. At the same time, rising pharmacy costs tied to GLP-1 demand are increasingly viewed as a strategic risk within employer benefits planning.

Scrutiny around PBM pricing and rebate structures has also intensified, with increased focus on [transparency, rebate practices, and market concentration](https://www.ftc.gov/news-events/news/press-releases/2024/07/ftc-releases-interim-staff-report-prescription-drug-middlemen). Employers are increasingly questioning whether traditional rebate-driven models align with long-term cost discipline.

Employers are also under [growing fiduciary pressure](/content/2025/02/managing-pharmacy-fiduciary-responsibility/index.html) to demonstrate structured oversight of high-cost medications. Obesity medications represent sustained multi-year cost exposure, making coverage expansion a financial governance decision, not simply a benefits enhancement.

In response, manufacturers are exploring more [direct engagement models with employers](https://www.hrdive.com/news/lilly-employer-direct-glp1-obesity-drugs-zepbound/813960/?utm_source=chatgpt.com), including models designed to improve access and reduce reliance on traditional PBM channels.

At the same time, pricing strategies are evolving. [Novo Nordisk has announced](https://www.prnewswire.com/news-releases/novo-nordisk-announces-significant-reduction-in-us-list-price-for-wegovy-ozempic-and-rybelsus-semaglutide-medicines-building-on-continued-efforts-to-expand-access-302695705.html) plans to reduce list prices for its GLP-1 medications beginning in 2027, though early analysis suggests that lower list prices may not materially reduce employer net costs given how existing rebate structures operate.

This matters most for self-funded employers evaluating GLP-1 strategy as part of upcoming planning cycles.

## What Employer Connect Signals

Historically, manufacturers influenced access indirectly through PBMs and health plans. Employers selected a PBM partner, and the PBM managed formularies, rebates, and utilization controls.

Now because of Employer Connect, manufacturers are positioning themselves as more active participants in employer access strategy. This doesn’t eliminate PBMs. It introduces another pathway into an already complex ecosystem.

As manufacturers move closer to employers, the balance of negotiating leverage between employers, PBMs, and drug makers may continue to change. Structural change isn’t inherently positive or negative, but it does require disciplined oversight.

## What This Means for HR and C-Suite Leaders

This development isn’t simply about whether to cover GLP-1 medications. It’s about how coverage fits into long-term total cost of benefits strategy.

Three areas deserve careful evaluation:

### 1\. Total cost impact over time

Direct manufacturer pathways often emphasize simplified or transparent pricing. That can be appealing in a rebate-driven environment. However, [cost](https://mma.marshmma.com/l/644133/2026-01-16/2x82nr/644133/1768576411k4G2ZZsG/EHB_Trends_Whitepaper.pdf?utm_source=form&utm_medium=lp&utm_term=ntl&utm_content=ehbtrendsreport&utm_campaign=ntl-ehbtrendsreport-lp-2026) remains the dominant concern in GLP-1 coverage decisions, with employers citing affordability and sustained utilization as key barriers.

GLP-1 medications are often long-duration therapies. Expanded access may increase both utilization and persistence. Lower acquisition cost doesn’t necessarily translate into lower total plan spend. Employers should model multi-year impact scenarios before viewing direct pathways as cost solutions.

### 2\. Governance and utilization controls

Expanded access requires guardrails.

Among employers that do offer GLP-1 coverage, most apply clinical or cost management controls, reflecting a move toward managed access rather than open-ended coverage. Many employers also implement clinical and utilization controls to manage exposure.

Any manufacturer-supported pathway should align with existing governance standards, including:

- Defined eligibility criteria
- Clinical prior authorization protocols
- Duration limits
- Reauthorization frequency
- Ongoing monitoring and reporting

Pharmacy decisions are subject to scrutiny from finance leaders and boards. Clear governance standards protect both the organization and the benefit strategy.

### 3\. Vendor alignment and ecosystem complexity

Most employers already manage multiple benefit partners across medical, pharmacy, specialty, digital health, and stop-loss coverage.

Introducing a manufacturer-supported access channel requires clarity:

- How does this integrate with the current PBM contract?
- Does it affect rebate guarantees or contractual performance terms?
- How does it interact with stop-loss risk?
- Who owns reporting and overall cost and utilization oversight?

For example, if a [manufacturer-supported pathway](https://www.healthcarefinancenews.com/news/eli-lilly-novo-nordisk-and-waltz-health-collaborate-access-obesity-drugs?utm_source=chatgpt.com) operates outside your primary PBM contract, rebate guarantees, reporting alignment, or stop-loss coordination could be affected. Without clarity, employers could unintentionally create parallel pharmacy channels with inconsistent oversight. In practice, this can spread pharmacy spend across multiple channels, reducing visibility and making cost forecasting more difficult without centralized oversight.

The risk isn’t expanded access itself. The risk is fragmented oversight. As manufacturers create parallel pathways into employer benefits, decision-making authority can become diffused across multiple partners. When oversight becomes diffused, cost predictability and accountability can erode. For employers already managing rising specialty spend and increased fiduciary scrutiny, that isn’t a minor operational detail. It’s a governance issue.

## It’s a Governance Story

This development reflects a broader shift in governance and control. These models are neither inherently risky nor inherently cost-saving. Their impact depends on how disciplined employers are in integration, oversight, and long-term cost modeling.

The opportunity for employers isn’t speed. It’s structure.

## Practical Next Steps for Employers

If you’re evaluating manufacturer-direct or manufacturer-supported programs:

- Stress test multi-year financial exposure under realistic utilization scenarios
- Ensure any new pathway adheres to the same clinical governance standards as your core pharmacy benefit
- Review PBM and stop-loss contracts before layering new access models
- Align finance, HR, and pharmacy leadership before making structural changes

Strategic alignment matters more than reacting to headlines.

## The Bottom Line

Lilly’s Employer Connect platform signals a broader trend: manufacturers are positioning themselves closer to employer benefit strategy.

For HR and C-suite leaders, this isn’t merely about obesity drug access. It’s about who controls benefit design, how oversight is maintained, and whether long-term cost stability remains intact.

The employers who navigate this shift successfully won’t be those who move fastest, but those who maintain the clearest and most disciplined governance structure as the pharmacy landscape continues to evolve.

## Need Help With Your GLP 1 or Pharmacy Strategy?

GLP 1 coverage decisions raise different questions for every organization. [Reach out to learn how Sequoia can help](/content/form/consultation/index.html) you consider how these choices fit into your broader benefits approach.

\]\]>Building the Future: Breakthroughs and Bold Thinkers Shaping How We Workhttps://www.sequoia.com/2026/04/building-the-future-how-ai-and-people-strategy-shape-how-we-work/

Thu, 09 Apr 2026 16:09:18 +0000https://www.sequoia.com/?p=64384How leading companies use AI and clear ownership to scale faster, build trust, and create a shared playbook for the future of work.

The post [Building the Future: Breakthroughs and Bold Thinkers Shaping How We Work](/content/2026/04/building-the-future-how-ai-and-people-strategy-shape-how-we-work/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

The companies best positioned for the future are not just experimenting with new tools. They are aligning employees around a shared playbook for how work gets done day to day. That shared understanding shapes how decisions are made, how intelligence is used, and how teams move forward together.

For investor‑backed companies under pressure to grow, this alignment is a strategic advantage. It allows organizations to scale efficiently without losing culture.

To create that alignment, companies must first answer an important question, one that came up again and again at [Transform 2026](http://www.transform.us/): Where and when should AI show up to support people?

## Start Where Impact Is Obvious

On the main stage, the CEO of Trial Library shared how they are using AI to help patients access expert-recommended oncology clinical trials. By integrating complex medical record data, Trial Library can match patients to trials with a level of precision that would have felt impossible just five years ago.

The focus was not on the technology itself, but on what it enables in moments that matter. As the CEO, Dr. Hala Borno, reflected, the real challenge is demystifying complexity at precisely the moment people need clarity the most.

At Trial Library, intelligence is embedded into high-stakes touchpoints rather than spread thin across every workflow. Not every process needs advanced technology, but the right ones can drive outsized outcomes.

For people leaders, these moments are familiar. Open enrollment, new-hire onboarding, life events, and compensation decisions all carry real financial implications and emotional weight. They are moments where confusion creates stress, and clarity builds trust.

When intelligence supports these experiences, it does not replace the human element. It creates space for it.

## Clarify Ownership to Move Faster

While at Transform there was some debate about how much responsibility an AI agent should have and if it should be treated like an employee in an org chart. But there was broad agreement on one thing: we still need human judgment guiding the ship. Moving faster depends less on adding automation alone and more on clear ownership and thoughtful, nuanced communication behind the scenes.

In a panel titled _The Identity Crisis of the Modern CPO_, Leander LeSure, chief people and diversity officer at Smarsh, emphasized the value of direct, human conversation grounded in real context. When leaders share that context consistently, invite honest debate, and reinforce shared principles, alignment accelerates. People feel informed and respected, the foundation for trust. And trust is often the deciding factor in whether companies can successfully adopt new systems and new ways of working, quickly and confidently.

Even the best AI agent needs direction and doublechecking. People still own the outcomes, and accountability still matters. Creating a shared playbook starts with that clarity and communication. Technology alone does not align teams. Leadership does.

## Building a Future We Trust

The future of work is being shaped by companies that balance technical speed with human clarity. At Transform we heard from leaders who saw a future where employees move faster because they trust their systems and each other. For leaders shaping the next stage of growth, the opportunity lies in designing a shared playbook that combines expert guidance, integrated platforms, and durable infrastructure. When that foundation is in place, each process becomes repeatable, scalable, and deeply human-centered.

Explore how Sequoia helps companies build people strategies that keep pace with change. Talk to an advisor [here](/content/form/consultation/index.html).

\]\]>Gen Z Employees Are Skeptical About Equity. Here’s What Founders and CFOs Can Do. https://www.sequoia.com/2026/04/gen-z-skeptical-about-equity-what-founders-and-cfos-can-do/

Tue, 07 Apr 2026 15:03:48 +0000https://www.sequoia.com/?p=64255Gen Z is skeptical of equity amid layoffs, volatile valuations, and delayed exits. Founders and CFOs can rebuild trust through clearer communication and liquidity.

The post [Gen Z Employees Are Skeptical About Equity. Here’s What Founders and CFOs Can Do.](/content/2026/04/gen-z-skeptical-about-equity-what-founders-and-cfos-can-do/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Over the past year, I’ve heard the same concern from Founders and CFOs: “Our younger employees don’t seem to care about equity the way we expected.” And it’s true. Gen Z is entering the workforce with unprecedented levels of skepticism, disengagement, and emotional distance from corporate tradition.

There’s data to back this: Studies have found a real generational shift in how young professionals perceive corporate promises, advancement paths, and long-term incentives like equity. Gallup polling and recent [McKinsey](https://www.mckinsey.com/~/media/mckinsey/email/genz/2025/02/2025-02-11b.html) research show employee engagement at decade lows, with workers under 35 driving much of the decline. Gen Z reports worse outcomes across the most important engagement indicators, from clarity of expectations to growth opportunities, further fueling doubt about employers’ promises and long-term rewards.

But the research suggests Gen Z’s apathy is not rebellion for rebellion’s sake. It’s a form of self-preservation shaped by economic instability, threat of automation, constant industry disruption, and declining trust in employers. This generation graduated into layoffs, watched equity reset overnight, and saw IPOs pushed years out. So, while some leaders see logging off at five and skipping the optional Zooms as a lack of commitment, others recognize that Gen Z is simply paying attention enough to set boundaries. As this generation steps into an uncertain landscape, can you blame them?

And, when equity’s perceived value is tied to an employee’s belief in the company’s future, these trends matter.

## Layoffs, Valuations, and Delayed Exits: Why Equity Feels Uncertain

With more than 30,000 layoffs occurring within the first six weeks of 2026 (and another 30,000 in one fell swoop from a staple tech company), tech has been off to a bumpy start. Despite record profits in some segments, falling company valuations have chipped away at the perceived value of employee equity. Startups and high-growth companies are staying private longer, delaying IPOs and other liquidity events. For employees, that means equity feels less tangible, less predictable, and less motivating. Even when things are going well, headlines signal that their jobs are always at risk. The uncertainty stacks up fast.

## Reframing Equity and Introducing Liquidity

So, what can you do about it? First, communicate equity more transparently, especially to new hires and younger employees who already express skepticism. Here’s some of the guidance we keep coming back to at Sequoia:

- **Acknowledge uncertainty upfront**, **even when the reality is uncomfortable**. Employees appreciate honesty about market volatility.
- **Connect grants to measurable milestones**. Tying equity to clear individual or company performance markers helps employees better understand timing, potential value, and how their own contribution makes a difference.
- **Give employees information about refresh cycles earlier**. In a layoff-heavy environment, explaining how refresh grants work, and why they exist, can reduce confusion or fear.
- **Link equity to purpose and mission**. When employees, particularly Gen Z, see social or mission-driven value in their work, they are more willing to view equity as part of a larger shared outcome rather than a disconnected financial incentive.

Beyond communication changes, liquidity programs like tender offers have become essential tools for maintaining morale, if you can offer them. These programs provide employees with opportunities to convert equity into tangible cash without waiting for an exit. And, in a contracting labor market, liquidity can differentiate an employer from competitors who are offering only theoretical long-term incentives.

For employees, when something is both uncertain and abstract, like equity, it feels misleading or even untruthful. While a single Founder or CFO can’t wave a magic wand and create total predictability around equity, there are opportunities to add clarity and opportunity, even for the most skeptical employee.

Gen Z continues to reshape expectations around work and purpose. Companies have to adapt their compensation & equity strategies accordingly. [Ask a Sequoia advisor about developing and communicating your equity program](/content/form/consultation/index.html).

\]\]>Protecting Your Executives and Board: Why Leadership Exposure Is Changing Faster Than Companies Realizehttps://www.sequoia.com/2026/03/executive-board-liability-risk/

Tue, 31 Mar 2026 16:04:08 +0000https://www.sequoia.com/?p=64045Executive and board liability risk starts earlier than most companies expect. Learn how D&O, cyber, fiduciary, and travel coverage protect leaders.

The post [Protecting Your Executives and Board: Why Leadership Exposure Is Changing Faster Than Companies Realize](/content/2026/03/executive-board-liability-risk/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Many leaders assume personal liability expands slowly as an organization grows, but [risk exposure](/content/2025/08/risk-management-is-a-story-worth-telling/index.html) begins the moment a company forms and builds through day‑to‑day decisions.

A quick exchange during a roadmap review, an investor update that lands differently than expected, a partner conversation that creates confusion later, or a loosely documented employment decision can all resurface months or years down the line. Leaders often recognize the exposure only when they see their names listed individually in a claim tied to something that seemed routine.

To help you get a clearer sense of where leadership exposure comes from, we’ll take a closer look at how it shows up in everyday moments, where gaps often hide, and the steps you can take now to feel more prepared.

## Leadership Exposure Today

Several forces affect leadership exposure across stages of growth. Each one creates new ways for decisions to be examined, often more quickly and more publicly than before.

Some of the most common drivers of leadership exposure:

- **Regulatory attention** is reaching companies earlier in their growth journeys, including those still refining business models.
- **Governance expectations are rising**, especially around documentation, decision‑making processes, and follow‑through.
- **Employment friction is growing**, especially within distributed and hybrid teams, where gaps in communication or expectations can escalate quickly.
- **Competition is intensifying**, particularly in markets where several startups pursue similar goals and closely monitor each other’s moves.
- **Cybercriminals are focusing on executives** because of their authority and access.
- **Global travel is increasing**, even when internal support structures for managing travel‑related risk remain limited.

Indemnification helps mitigate these risks, but it depends on the strength of the company, which isn’t always certain during fast growth or market downturns.

## How D&O Coverage Protects Leadership

Directors and Officers (D&O) insurance protects leaders from personal liability when their decisions on behalf of a company come under scrutiny. Most claims arise from everyday business friction, such as a:

- Missed milestone that affects investor expectations
- Hiring decision that wasn’t fully documented
- Misunderstanding about a product timeline
- Competitor alleging unfair advantage
- Misinterpreted fundraising update

D&O coverage addresses these scenarios through three “sides” that work together.

### Side A — Protection for Individuals

This protects executives and board members personally when the company can’t indemnify them due to legal restrictions or financial constraints. It’s the layer that helps shield their personal assets.

### Side B — Company Reimbursement

This layer reimburses the company after it indemnifies its leaders. Most routine D&O matters fall into this category.

### Side C — Protection for the Entity

This element protects the company itself when it’s named in a claim. For public companies, this typically applies to securities claims. For private companies, the scope is often broader.

## Common Leadership Claims

Claims involving leadership rarely start with dramatic events. Instead, they often grow from routine interactions that seemed uneventful at the time. Here are some examples:

### Investor expectations are misaligned

A missed milestone leads an investor to allege that the board didn’t communicate runway concerns clearly.

### Termination decisions are questioned

A remote employee files a claim and names the executive who approved the termination.

### Vendor oversight is challenged

A vendor delays remittances, which results in allegations that fiduciaries didn’t monitor performance effectively.

### Cofounder dispute emerges

A disagreement about equity surfaces during a fundraising event and becomes a personal allegation.

### Competitor raises concerns

Two companies launch similar features, and one alleges unfair competition or misuse of confidential information.

### Partners misinterpret timelines

A partner expected a launch based on informal conversations, which becomes a misrepresentation claim.

## Cyber Exposures Targeting Executives

Cybercrime has become a growing area of exposure, with executives now among the most common entry points for cyber incidents. Their authority, communication patterns, and privileged access make them especially attractive targets.

As a result, several leadership‑specific exposures are showing up more often:

## Social engineering

Attackers impersonate an executive via email, text, Slack, or WhatsApp to authorize payments or share sensitive information.

### Deepfakes

[Audio or video generated by AI](/content/2026/02/ai-risk-business-liability-insurance/index.html) mimics a leader’s voice or appearance convincingly enough to direct employees to take harmful actions.

### Business email compromise

When attackers gain access to an executive’s account, the result can include financial loss, privacy exposure, and governance‑related allegations.

### Personal device use

Leaders who conduct business on personal devices may unintentionally expose sensitive decisions to cyber or legal scrutiny.

### Board‑level impersonation

Fraudsters pose as directors during fundraising, M&A, or confidential discussions.

## How Cyber Insurance Protects Leadership

[A well‑structured cyber program](/content/2025/09/cyber-liability-risk/index.html) can support leadership by providing:

- Coverage for funds transfer fraud and social engineering
- Support for business email compromise incidents
- Protection for executive impersonation
- Access to incident response teams and legal advisors
- Forensic analysis and containment support
- Crisis communication resources

These protections are important because many events begin as cyber incidents and later lead to governance questions. Cyber and D&O programs increasingly work together to protect leadership.

## Fiduciary Liability for Leaders Overseeing Benefit Plans

Fiduciary liability protects the leaders responsible for managing employee benefit plans. These responsibilities often fall on CFOs, COOs, HR leaders, or committee members, and come with strict legal expectations.

Coverage responds to allegations involving:

- Administration of the plan
- Vendor selection and oversight
- Fee reasonableness
- Timely contribution remittance
- Monitoring investment options
- Documentation and transparency

Claims in this area are becoming more common because employees are paying closer attention to how plans operate. Also, [mistakes caused by vendors](/content/2025/10/third-party-liability/index.html) can result in personal allegations against fiduciaries.

## Employment Practices Liability for Executive‑Named Claims

Employment practices liability (EPL) claims often name individual leaders, especially in organizations with distributed teams. Terminations, performance discussions, restructuring decisions, promotion reviews, and compensation matters can all lead to claims involving executives, even when the company is the primary focus.

EPL coverage responds to allegations involving:

- Discrimination
- Wrongful termination
- Harassment
- Retaliation
- Employment‑related misrepresentation
- Inconsistencies in how decisions were communicated

Leaders are named more often when employees believe an executive directed or approved a decision. As teams grow across time zones and interactions become more fragmented, these claims surface more quickly and become more complicated.

## Travel Exposures for Executives and How BTA and K&R Help

[Leadership travel](/content/2025/11/duty-of-care-risk-strategy/index.html) introduces exposures many companies overlook, especially once executives begin traveling for fundraising, manufacturing, customer work, or international expansion.

Here are the most common, often underestimated risks:

### Medical emergencies abroad

Personal health insurance may not cover treatment outside the home country, medical evacuation, or repatriation.

### Accidents during travel

Incidents during company‑related travel may fall into gaps between personal insurance and corporate policies.

### Detention or coercion

Documentation issues, political misunderstandings, or disputes with local authorities can escalate for high‑visibility travelers.

### Data‑ or money‑driven extortion

Executives are appealing targets for criminals seeking access, payments, or leverage.

### Travel interruptions impacting business decisions

Stranded executives may be forced into unfamiliar or vulnerable environments without adequate support.

## What Business Travel Accident Policies Cover

Business Travel Accident (BTA) insurance fills gaps left by personal health or life insurance. It provides:

- Accidental death and dismemberment benefits
- Coverage for injuries during work travel
- Emergency medical evacuation
- Repatriation
- Travel assistance services

## What Kidnap and Ransom Policies Cover

Kidnap & Ransom (K&R) coverage is relevant for any executive with visibility or access to sensitive information, not only those traveling to high‑risk regions. It provides:

- Crisis response teams
- Negotiation specialists
- Coverage for unlawful detention, extortion, coercion
- Support for data‑related extortion or blended cyber‑physical threats
- Reimbursement for ransom, legal expenses, and recovery

## Closing Thoughts

Leadership exposure grows from ordinary decisions that define the rhythm of a company’s work. A strong protection strategy includes:

- Clear understanding of D&O coverage
- Cyber programs that account for leadership‑specific attacks
- Fiduciary liability that matches the complexity of plan oversight
- BTA and K&R support for frequent travelers
- EPL and operational coverage that reflects modern workforce dynamics

Think beyond indemnification for leaders. Aim for a risk approach that keeps pace with their responsibilities, visibility, and the environment they operate in.

## Want to Feel More Confident About Your Leadership Exposure?

Whether you’re refining policies or preparing for what’s ahead, [Sequoia can help you understand your risk exposure](/content/risk/index.html) and build the right protections. [Connect with a Sequoia risk advisor](/content/form/consultation/index.html).

**More by Kristen Peed:**

- [Risk Management Is a Story Worth Telling](/content/2025/08/risk-management-is-a-story-worth-telling/index.html)
- [Cyber Liability Risk in the Age of AI: Smarter Tools, Higher Stakes](/content/2025/09/cyber-liability-risk/index.html)
- [Are You Really Covered? Why General Liability Isn’t Enough for Third-Party Risk](/content/2025/10/third-party-liability/index.html)
- [Travel Risks: Why Employers’ Duty of Care Doesn’t Take Holidays](/content/2025/11/duty-of-care-risk-strategy/index.html)
- [Risk Resolutions for 2026: Get Your Insurance Program in Shape](/content/2026/01/risk-management-resolutions/index.html)
- [Understanding AI Risk Before It Becomes Exposure](/content/2026/02/ai-risk-business-liability-insurance/index.html)

\]\]>Transform 2026: Sequoia’s Clients Shaping the Future of Workhttps://www.sequoia.com/2026/03/transform-2026-sequoia-clients-ai-future-of-work/

Fri, 27 Mar 2026 16:39:05 +0000https://www.sequoia.com/?p=63937A look back at Transform 2026, where Sequoia and its clients explored AI, humanity, and how leaders are rethinking people investment and the future of work.

The post [Transform 2026: Sequoia’s Clients Shaping the Future of Work](/content/2026/03/transform-2026-sequoia-clients-ai-future-of-work/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

For Sequoia and our clients, [Transform](http://www.transform.us/) has been more than a conference. It’s a space where CHROs, CFOs, and founders come together to connect, challenge assumptions, and shape the future. This year’s theme, AI + Humanity, felt especially meaningful.

Transform 2026 also marked an important milestone for Sequoia. We launched [Sequoia Pages](/content/2026/03/sequoia-pages-collaborative-reporting/index.html), the first and only collaborative, unified workspace for people spend decisions. And we released our [2026 Total Compensation & Benefits Report](/content/2026/03/2026-compensation-benefits-trends/index.html), a deep dive into compensation and benefits trends across the AI landscape, the ripple effects of rising healthcare costs on other benefits, and shifts in equity pay.

## Sequoia Clients Leading the Conversation

We loved seeing more than 30 Sequoia clients on the expo floor like Thatch, Leapsome, Carrot, and Cocoon, and listened to the more than 20 clients on panels and mainstage talks. Sequoia clients were driving the conversation.

In panel sessions, Leander LeSure, Chief People and Diversity Officer at Smarsh talked about the importance of setting boundaries and Brex Chief People Officer Heather Dunn discussed how to be proactive and move quickly. Trial Library’s Founder and CEO, Dr. Hala Borno along with SemperVirens General Partner Allison Baum Gates and Managing Partner at Next Ventures and former professional cyclist Lance Armstrong took the mainstage to discuss the importance of expanding access to clinical trials.

Some of our favorite moments happened between sessions, visiting with clients at their booths.

### Sequoia on Stage: People Investment in the Age of AI

If there was one question in everyone’s mind at Transform it was, “What does AI mean for how we invest in people?” Our panel, moderated by Sequoia’s Chief Marketing Officer Michele Floriani, tackled that head-on. Our panelists, Kenny Mendes, Chief People Officer at Superhuman, Jennifer Christie, Chief People Officer at Docusign, Kyle Holm, VP of Compensation Advisory at Sequoia, explored how AI is reshaping people spend, productivity expectations, and org strategy.

Perhaps the most refreshing moment of the panel was the collective humility. Said perfectly by Christie, “Anyone who says ‘yeah, I’ve totally figured this out, we’ve nailed it’ … it’s changed so much that they haven’t nailed the next thing.” Mendes extended that to employees as well when he said, “Focus on the learning. Give people access to the tools and let them know it’s okay to fail.”

The panelists pointed out that leaders at every level are still iterating, still learning, still making bets. The best thing we can do is collaborate more, share learning across companies, build in ethical guardrails and accountability, and stay focused on the long game.

Holm closed with a word on something AI can’t provide. Personal relationships. “What is really important now is that we advisors understand the outcomes for companies. That relationship becomes so important. That, to me, is the exciting thing about AI. We actually get to be somebody that is connected with you along the way.”

It was exactly the kind of conversation we come to Transform to be a part of, and we’re grateful to the panelists who brought their candor and experience on stage.

As we all return to our desks, we’re taking with us a quote from a main stage talk with Jacqui Canney, Chief People and AI Enablement Officer at ServiceNow. She said, “I am so, so optimistic about what a room this size of people team leaders can do and what we will be talking about in 2030.”

Thank you to Transform and our clients for making it one to remember. You can find more information about our Sequoia Pages launch [here](/content/total-comp-benefits/index.html).

\]\]>Introducing Sequoia Pages: Create Living Reports on Sequoia OS with the First Intelligent, Collaborative Workspacehttps://www.sequoia.com/2026/03/sequoia-pages-collaborative-reporting/

Tue, 24 Mar 2026 03:07:12 +0000https://www.sequoia.com/?p=63776Sequoia Pages brings live data, analytics, and collaboration together in one workspace, helping leaders create dynamic reports and make confident total rewards decisions.

The post [Introducing Sequoia Pages: Create Living Reports on Sequoia OS with the First Intelligent, Collaborative Workspace](/content/2026/03/sequoia-pages-collaborative-reporting/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Total Compensation and Benefits decisions are growing more complex by the day. Leaders need confidence that their holistic total rewards strategy works in concert to support company goals, yet the underlying data for these decisions exists in siloed systems and processes.

Sequoia Pages solves this problem. Building on the foundation of Sequoia OS Analytics, Pages brings data, analytics and planning together in one canvas. Working from the same always-live data, your leadership team and Sequoia advisors can review, make comments, and add insights to accelerate the time from decision to action

## **How Sequoia Pages Works**

Once you’ve connected Sequoia OS to existing systems, such as HRIS, payroll, equity, benefits, and ATS, Sequoia Pages pulls metrics into its one connected platform. Then, the charts and analysis you create stay up to date, with the context from your Sequoia advisor right where you need it.

From there, Sequoia Pages makes it easy to bring your reporting and decision making into one place. You can create a Page from scratch, add narrative context with text and images, and include the charts and metrics you and your team rely on most. When you’ve got a format you like, save it as a reusable template so your team stays consistent month after month. Sequoia Pages also follows Sequoia OS permissions, so users will automatically see your metrics and charts without any extra setup.

A quick way to begin is with a Page your Sequoia team shares, like your quarterly reports. You can clone that Page and tailor the analytics for ongoing reporting. With any Page, you have full control over the timeframe with an intuitive date range filter. You can quickly shift between time periods to spot trends, answer questions from leadership quickly, and validate impact.

Bringing insights, narrative, and decision-making for Sequoia advisors and Sequoia clients into one connected workspace lets you move from analysis to action without switching tools or losing context. Instead of rebuilding reports, you start with live data and collaborate in real time, making it easier to understand what matters, build a clear storyline, and guide your team to confident decisions.

- **See what matters:** View workforce metrics and advisor notes for any timeframe or use your quarterly business review Page as a single source of truth for what changed.
- **Build the narrative**: Create reports that read like a storyline, not a spreadsheet, connecting it to live metrics. Add teammates to the Page so review happens with context, not over email.
- **Share and revisit**: Share one link that leaders can review anytime and download a copy for offline sharing.

### **How to Use Sequoia Pages**

Sequoia Pages is available now in the Analytics module of Sequoia OS for Sequoia clients to explore custom data views, go-to metrics, and more. Looking for a preview to share with your team? Check out this video introducing Pages in Sequoia OS.

[iframe](https://player.vimeo.com/video/1176408402?badge=0&autopause=0&player_id=0&app_id=58479)

Sequoia clients will find their Quarterly Business Review in Sequoia Pages going forward. And, with Pages, you’ll get a dynamic report that your leaders can use before, during, and after the meeting. Your Sequoia team can share more about what this looks like for you.

**What’s ahead for Sequoia Pages in 2026**

The features coming next for Sequoia Pages are designed to further reduce manual work, strengthen consistency across recurring reports, and make it easier to understand how decisions evolve over time. Here’s what’s ahead in 2026:

- AI text assistant to help draft and refine Page copy, so you can move from insight to narrative faster
- Folders and a stronger metrics catalog to keep recurring reports organized and reduce time searching for the right view

**Explore more and see Sequoia Pages in action at Transform 2026**

At Sequoia’s booth (booth #221) at the Transform 2026 conference, March 23-25 in Las Vegas, clients can tour Sequoia Pages’ advanced analytics dashboards, workflow automation, and expanded integration capabilities. Or, visit [sequoia.com/total-comp-benefits/](/content/total-comp-benefits/index.html) pages for more information.

\]\]>From AI Talent to Rising Healthcare Costs: Highlights from Sequoia’s 2026 Total Compensation & Benefits Reporthttps://www.sequoia.com/2026/03/2026-compensation-benefits-trends/

Tue, 24 Mar 2026 02:17:56 +0000https://www.sequoia.com/?p=63699Sequoia’s 2026 report reveals rising AI talent demand, accelerating healthcare costs, and a shift toward precise, high‑impact total rewards strategies.

The post [From AI Talent to Rising Healthcare Costs: Highlights from Sequoia’s 2026 Total Compensation & Benefits Report](/content/2026/03/2026-compensation-benefits-trends/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

If 2024 was about correction, and 2025 was about efficiency, 2026 is unmistakingly about precision. Companies aren’t reducing their total rewards investment; they’re reshaping it with surgical intent. They are reallocating dollars to the places they matter most. And, they’re doing it under pressure from two powerful, converging forces.

The demand for AI skills has crossed from hot trend to structural reality. According to [Catherine Fisher](https://www.cbsnews.com/news/linked-in-ai-and-jobs/), a career expert at LinkedIn, AI literacy is the top skill employers are looking for. At the same time, escalating healthcare costs are driving tough trade-offs in benefits design. Employers are staring down the steepest healthcare cost increase in more than a decade. These rising pressures are forcing organizations to rethink their benefits architecture, often making difficult trade-offs to manage spend.

Despite cost pressure, companies are doubling down on what consistently works: wellness programs, which have become both a cost mitigation tool and retention lever. Employers are intensifying investment in mental health access, preventative care, and fertility. In a year defined by precision, wellness is one of few areas where benefits leaders see both measurable ROI and meaningful employee value.

Total rewards is no longer about generosity. It’s about precision, prioritization, and proof of impact.

## **The Era of Across-the-Board Raises Is Fading**

For years, software companies defaulted to a familiar pattern: distribute merit increases evenly and adjust pay a few percentage points based on performance. In 2026, that model is changing.

AI/ML companies, faced with fierce competition and a talent market defined by scarcity, are reengineering how they think about merit cycles. They’re treating it as an allocation decision, concentrating rewards where they generate the greatest business return.

Rather than spreading modest increases across the entire workforce, organizations are directing disproportionate investment toward high-impact and revenue critical roles, especially engineering, research, AI infrastructure, and applied science. These are the roles advancing models, shipping new capabilities, and ultimately determining how fast the company can innovate when speed is critical.

This is less “merit cycle” and more “capital allocation strategy.”

Managers are expected to articulate impact with far more precision and HR teams are reshaping communication to help employees understand that equity, bonuses and rases follow business strategy. The new mandate is to invest where it matters most and be explicit why.

## **Benefits Strategy and Healthcare Cost Management**

Healthcare costs aren’t just rising; they’re accelerating at a pace that forces employers to make tough calls.

To absorb year-over-year cost inflation, companies are moving away from once-standard offerings like 100% employer-paid coverage. Employers are shifting toward higher deductibles, refined plan design, and more aggressive oversight.

With stretched budgets, the divergence between early-stage and later-stage companies is more pronounced. Early-stage companies, especially AI/ML companies recruiting talent with high salary expectations, are prioritizing cash and equity over benefits packages for their employees. Scaled companies, however, face a different challenge. Many already offer comprehensive healthcare benefits, and pulling back now risks brand damage, employee dissatisfaction, and competitive disadvantage. Established organizations must preserve benefit levels as a part of their retention strategy.

Benefits strategy in 2026 is centered on sustainability, design discipline, and clear communication. It’s a strategic cost center demanding the same precision, modeling and judgement companies apply to capital allocation.

## **Wellbeing Investment Isn’t Disappearing. It’s Evolving.**

Even as healthcare costs surge and benefits budgets tighten, investment in employee wellbeing have staying power. [Wellbeing](/content/2026/02/2026-medical-renewals-wellbeing-programs-insights/index.html) programs overall are proving so indispensable that 68% of employers made no cuts to these offerings in 2026 despite rising medical renewals. About a quarter (22%) of companies even added new wellbeing programs.

Employers are becoming more selective and strategic, directing dollars toward the most impactful and meaningful programs. A selection of mental health support options, according to [Sequoia’s 2026 Wellbeing Trends Report](/content/reports/2026-wellbeing-trends/index.html), is becoming commonplace with 68% of employers working with two or more mental health vendors. Companies are expanding access to therapy platforms, resilience training, digital mental health tools, and manager education to better support teams.

Fertility and family-centric benefits are also expanding to meet the needs of diverse workforces and the rising number of employees with caregiving responsibilities of either children, aging parents, or both ( [Guardian](https://www.prnewswire.com/news-releases/number-of-full-time-workers-who-are-juggling-caregiving-responsibilities-has-increased-by-double-digits-even-as-more-women-leave-the-workforce-302619200.html)). Support now commonly includes fertility treatment coverage, adoptions assistance, and family-care resources as retention tools.

In the total rewards ecosystem, wellbeing has become one of the most essential, strategic components.

## **2026 Demands a New Level of Precision.**

Companies can no longer rely on broad-based strategies or legacy playbooks. Instead, they must operate with intention and lean on advisors with a broad view of market trends. The pressures shaping this moment are real and converging fast. AI talent continues to command premium pay, rising healthcare costs are forcing employers to redesign benefits, and across the board, leaders and being asked to do more with the same budget. Each people spend decision, now more than ever, contributes to long-term competitiveness.

Yet this environment isn’t only about constraint. It’s also about opportunity. Wellness programs are maturing into one of the most effective levers companies have. Total rewards is a unified strategy connected to business outcomes. A strategy that requires both analytical rigor and humanity.

To see the full analysis, including data, benchmarks, and insights across compensation, benefits, wellness, and workforce trends, view the [full report](/content/reports/2026-total-comp-benefits-report/index.html).

\]\]>USPS Postmark Changes: What Plan Sponsors Need to Knowhttps://www.sequoia.com/2026/03/usps-postmark-changes-what-plan-sponsors-need-to-know/

Fri, 20 Mar 2026 14:41:57 +0000https://www.sequoia.com/?p=63664Effective December 24, 2025, the U.S. Postal Service (USPS) implemented a significant operational change that has meaningful implications for benefit plan sponsors. Historically, the USPS postmark could be relied upon as a dependable indicator of the day a document entered the mail system. Whether a notice was handed to a letter carrier, dropped at a post office counter, or placed in a blue box collection, the postmark typically aligned with the date the mail was deposited.

The post [USPS Postmark Changes: What Plan Sponsors Need to Know](/content/2026/03/usps-postmark-changes-what-plan-sponsors-need-to-know/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Effective December 24, 2025, the U.S. Postal Service (USPS) implemented a significant operational change that has meaningful implications for benefit plan sponsors. Historically, the USPS postmark could be relied upon as a dependable indicator of the day a document entered the mail system. Whether a notice was handed to a letter carrier, dropped at a post office counter, or placed in a blue box collection, the postmark typically aligned with the date the mail was deposited.

That operational certainty is no longer guaranteed. As part of its nationwide restructuring, the USPS has consolidated and reduced several processing centers. Mail may now be routed to a distant facility before being processed and postmarked, causing a delay that could stretch for several days beyond the date of mailing. This means that plan sponsors cannot rely on the date that mail was delivered or deposited to be the same date it will be postmarked by the USPS.

**Why This Matters for Employers**

Employers as plan sponsors are required to send various benefit plan-related disclosures and notices to their employees, including summaries of benefits and coverage, summary plan descriptions, HIPAA privacy notices, and COBRA election notices, that must be furnished within specific timeframes. Although electronic delivery is becoming more common, physical mail remains the default method for many employers due to varying factors such as employee demographics, consent requirements, and established administrative processes.

When disputes arise over whether a notice was provided on time, courts have often relied on the long-standing “mailbox rule,” which treats the postmark date as presumptive evidence of mailing. While this rule has not changed, the reliability of the postmark date as a proxy for mailing date has. Under the new USPS policy, machine-stamped postmarks may reflect the date of processing and not the first date the post office received the item.

Therefore, employers can no longer assume that the “date mailed” will equal the “date postmarked,” and this misalignment can create exposure if an employee later challenges the timeliness of a required disclosure. Delayed postmarks may also complicate audits, appeals, and disputes involving coverage rights and obligations.

**Recommended Actions for Employers**

Given the new USPS policy, employers should reassess how they prepare and manage time-sensitive mailings, and consider the following approaches:

1. **Use Proof-of-Mailing Methods** – Services such as a third-party administrator’s metering machine, Certificates of Mailing, or Certified Mail, can help provide documentation for establishing time of mailing. Employers may also take documents directly to a local post office and request a validated postmark free of charge.
2. **Coordinate with Third-Party Vendors** – This is a good time for employers to check in with third-party administrators, COBRA vendors, and other service providers to confirm their processes for meeting benefit plan communication deadlines and documenting timely delivery.
3. **Evaluate Electronic Distribution** – Electronic disclosures remain subject to regulatory requirements (e.g., DOL and HHS electronic disclosure rules) but provide speed, tracking, and reliability that traditional mail cannot match.
4. **Build in Additional Mailing Time** – If physical mail is necessary or required, adding a buffer of at least three to four business days may reduce the risk of postmark-related challenges.
5. **Document Procedures Consistently** – Clear internal protocols for mailing, tracking, and storing records will help support your position if timing becomes a contested issue.

**Additional Resources**

- [39 C.F.R. Part 111](https://tps//www.federalregister.gov/documents/2025/11/24/2025-20740/postmarks-and-postal-possession)
- [USPS Postmarking Myths and Facts FAQ](https://about.usps.com/newsroom/statements/010226-postmarking-myths-and-facts.htm)

\]\]>2026 PBM Reform: What Employer Plan Sponsors Need to Knowhttps://www.sequoia.com/2026/03/2026-pbm-reform-what-employer-plan-sponsors-need-to-know/

Thu, 19 Mar 2026 12:43:14 +0000https://www.sequoia.com/?p=63662Early 2026 brought two major federal actions that reshape how pharmacy benefit managers (PBMs) are regulated and how plan fiduciaries oversee prescription drug benefits.

The post [2026 PBM Reform: What Employer Plan Sponsors Need to Know](/content/2026/03/2026-pbm-reform-what-employer-plan-sponsors-need-to-know/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Early 2026 brought two major federal actions that reshape how pharmacy benefit managers (PBMs) are regulated and how plan fiduciaries oversee prescription drug benefits.

- **January 30, 2026**: The Department of Labor (DOL) issued proposed rules that would require PBM fee disclosures to ERISA self-funded group health plans.
- **February 3, 2026**: Congress enacted the Consolidated Appropriations Act, 2026 (CAA 2026), which goes further by mandating 100% rebate pass-through, expanded reporting, and new participant disclosures.

Together these changes send a clear message that PBM arrangements are no longer something plan sponsors can treat as too technical or complicated to understand. Fiduciaries are expected not only to obtain PBM data but to evaluate it, document decisions, and monitor PBM performance over time.

**DOL Proposed PBM Disclosure Rules**

**Scope of the Proposed Rules**

The proposed rules apply to PBMs serving ERISA self-funded (including level funded) group health plans. They also apply to related entities that expect to receive at least $1,000 in direct or indirect compensation in connection with PBM services. This may include affiliated brokers, consultants, rebate aggregators, group purchasing organizations, and even affiliated pharmacies. The proposed rules do not apply to fully insured plans.

**Core Disclosure Requirements**

PBMs would be required to provide advance, detailed disclosures of all expected compensation and the methods used to calculate it. This includes administrative fees, per-member or per-claim fees, manufacturer rebates and fees, spread pricing revenue, payments to affiliates, data or service fees, and any other direct or indirect compensation.

**Audit rights**

Plans must have the right to audit the accuracy of these disclosures at least annually and fiduciaries may choose the auditor.

**Fiduciary implications and timing**

The DOL stops short of declaring that PBMs are fiduciaries. However, it does raise expectations for plan fiduciaries to review the PBM disclosures, assess reasonableness of compensation, identify conflicts, understand cost drivers, and monitor PBM performance. If finalized as proposed, the rule would apply to **plan years beginning on or after July 1, 2026. For calendar year plans, that is January 1, 2027**.

**Consolidated Appropriations Act of 2026**

The Consolidated Appropriations Act of 2026 (CAA 2026) applies to ERISA self-funded group health plans and to insurers providing fully insured ERISA plans. Most provisions take effect for **plan years beginning on or after August 3, 2028, which means January 1, 2029, for calendar year plans**.

**Enhanced PBM Reporting for Self-Insured Large Employers and Large Plans**

PBMs must provide self-insured group health plans offered by large employers (at least 100 employees) and large plans (at least 100 participants) with detailed, drug level reporting at least semiannually (or quarterly upon request). These reports must include information such as plan paid vs. pharmacy paid amounts, details about participant cost-share, and pharmacy network data. Large fully insured health plans can opt into receiving the reports.

**Summary Reporting Required for All Plans**

Entities providing pharmacy benefit management services must provide every plan, regardless of size or funding, with a summary document containing most of the information included in the enhanced reports for large employers and large plans. This summary must be furnished on the same semiannual/quarterly schedule and is intended to give all plan fiduciaries a usable overview of drug spending, pricing, and PBM compensation.

**Participant Disclosures and Access Rights**

Entities providing pharmacy benefit management services must provide every plan (self-insured or fully insured) with a summary document that the plan can provide to participants and beneficiaries upon request. Every plan must give written annual notice to participants explaining the new reporting requirements and informing them of their rights to access PBM related information. Participants and beneficiaries may request specific claim level information for claims incurred by the participant or beneficiary.

**Mandatory 100 Percent Rebate Pass-Through**

PBMs must pass through all rebates and discounts from drug manufacturers to self-funded plans and to insurers for fully insured plans. Payments must be made quarterly, within 90 days after the end of each quarter.

**Penalties**

Failure to comply can result in civil monetary penalties of up to $10,000 per day during which the violation continues or the information is not disclosed.

**What This Means for ERISA Fiduciaries**

The CAA 2026 raises the bar on PBM oversight. Under ERISA, plans can only contract with “parties in interest” like PBMs if the arrangement is reasonable and the compensation is reasonable under §408(b)(2). Now under the CAA 2026, a PBM contract cannot be considered “reasonable” unless the PBM agrees to 100% rebate pass through and meets the disclosure requirements. Historically, many plan sponsors relied heavily on consultants or market norms when evaluating PBM contracts. Going forward, that will be difficult to defend. Now that detailed data will be available, fiduciaries are expected to:

- Understand how their PBM is paid
- Evaluate conflicts of interest
- Assess whether compensation aligns with services provided
- Monitor performance over time

Plan fiduciaries will have more visibility and with that comes more responsibility.

**Comparison: DOL PBM Disclosure Rule vs. CAA 2026 PBM Reform**

The DOL proposed rules are narrower and focused on disclosure to self-funded ERISA plans. The CAA 2026 applies to both self-funded and fully insured ERISA plans, mandates complete rebate pass through and adds participant notice requirements. Because the DOL proposed its rules before the CAA 2026 was enacted, it is likely the final DOL rules will be adjusted to coordinate with the CAA 2026.

|     |     |     |
| --- | --- | --- |
| **Topic** | **DOL Proposed PBM Disclosure Rule** | **CAA 2026 PBM Reform** |
| Who it applies to | Self-funded ERISA group health plans | Self-funded and fully insured ERISA group health plans |
| Effective date | If finalized as proposed, plan years beginning on or after July 1, 2026 (calendar year plans: January 1, 2027) | Generally, plan years beginning on or after 30 months after enactment (calendar year plans: January 1, 2029) |
| Primary focus | PBM compensation disclosure and fiduciary oversight; audit rights | 100% rebate pass-through, expanded reporting, participant access and notices, audit rights |
| Penalties | No explicit civil penalties; enforcement via ERISA prohibited transaction consequences | Explicit civil penalties (e.g., up to $10,000/day for non-disclosure) and ERISA exposure for unreasonable arrangements |
| Participant rights | None specific to the DOL proposed rules | Annual notices; access to plan level summaries and claim level spread data |

**Employer Takeaways**

The federal focus on PBM transparency is a shift in expectations. Plan sponsors will have more visibility, and they are expected to use it. The responsibility now extends beyond obtaining data to understanding it and acting on it through prudent PBM selection, ongoing monitoring, and well documented decisions.

**Employer Action Steps**

**All Employers:** Every plan sponsor, regardless of funding type, should:

- Identify all PBM related service providers
- Adopt a simple fiduciary review process to evaluate compensation, conflicts and performance
- Issue required annual participant notices and provide PBM summary documents upon request
- Monitor upcoming agency guidance and adjust contracts or processes, as needed

**Self-Insured Plans (including level funded):** Self-funded employers will receive the full set of PBM reports automatically. They should:

- Update PBM contracts to require 100% rebate pass through, required disclosures and audit rights
- Run RFPs or renegotiate if current PBMs will not agree to compliant terms
- Review reports each cycle and document conclusions
- Coordinate participant requests for summaries and claim-level data

**Fully Insured Plans:** Fully insured employers have fewer operational requirements but still have fiduciary duties. They should:

- Decide annually whether to opt-in to enhanced PBM reporting (if a large plan)
- Confirm the carrier’s PBM contract meets rebate pass through and disclosure rules
- Review carrier provided summaries and document oversight
- Ensure annual notices are delivered to participants

\]\]>Are You Benchmarking Your Way to the Wrong Pay Strategy?https://www.sequoia.com/2026/03/compensation-strategy-beyond-market-data/

Wed, 18 Mar 2026 12:47:37 +0000https://www.sequoia.com/?p=63510Learn why market benchmarks alone can lead you to the wrong pay strategy, and how internal data provides the evidence you need to build compensation programs that truly drive business outcomes.

The post [Are You Benchmarking Your Way to the Wrong Pay Strategy?](/content/2026/03/compensation-strategy-beyond-market-data/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Benchmarking to market is standard practice for any compensation team because it gives you a baseline to guide and defend your decisions with internal stakeholders. But if market data is the only input shaping your pay strategy, you may be optimizing for the wrong things.

Hitting an intended target market percentile isn’t going to build a high-performing compensation program on its own. The real sign of success is your company’s sustained ability to attract the talent you need, retain your most critical employees, and prove that every dollar spent is moving the business forward.

Most companies aren’t there yet. And often, it’s because they’re expecting market benchmarks to answer questions that only their internal data can solve.

## Market Data Is Just the Starting Point

Market data can provide you with two primary pieces of information: where your employees’ pay falls relative to market benchmarks, and where your program targets land compared to those same benchmarks. Used well, market data gives you a defensible framework for setting pay ranges and a common language for talking to candidates, employees, and leadership about compensation.

The scope you apply to your market data is just as important as where you want to target within the market, and different scopes can lead to very different outcomes. At the non-executive level, industry and location are the primary drivers of salary benchmarking. At the executive level, industry and company size — whether measured by valuation, capital raised, or revenue — becomes more important, and location is less of a factor. For incentive programs like bonus and equity, industry, size, and stage are the variables that matter most.

Done right, market benchmarking gives you a solid foundation. The problem is when it becomes the ending point, too. It should be more of a guidepost than the end goal.

## When to Move Beyond the Market Data

Market data has real limitations that are worth understanding before placing too much weight on it.

An increasingly constant challenge in the market is survey data quality. Any market survey is going to have discrepancies due to low participant counts for specific roles, gaps created by granular filter combinations, and survey mapping errors that can distort your ranges if you’re not looking closely.

This is why anchoring too tightly to market data, without having other levers in your data toolkit, can become a risk for your compensation programs. One of the biggest risks is throwing money at problems that compensation won’t solve.

Often, if turnover is high in a particular department, the instinct is to move up the pay range. But if the real issue is a difficult manager, an unsustainable workload, or a bonus structure that nobody believes is attainable, increasing the target market percentile won’t move the needle on your desired outcomes. It will just cost more.

## 3 Metrics That Matter More Than Your Percentile

The strongest compensation teams track whether their programs are delivering the right business outcomes, without hyper-focusing on matching the market precisely. That means looking closely at three areas: program ROI, talent attraction, and retention.

For program ROI, the metrics to track can include ongoing spend relative to initial budgets, revenue or valuation per employee over time, employee satisfaction scores related to compensation, and whether performance scores correlate with incentive payouts year over year. If you’re running a pay-for-performance program, are the people who consistently hit their goals staying and continuing to perform? If not, something in the design could be misaligned.

For attraction, your offer acceptance rate, whether too high or too low, is the most telling number. A low acceptance rate may mean your compensation isn’t competitive. A very high acceptance rate can mean you’re overpaying.

You should also look at where new hires are landing within your pay bands. If most new employees are coming in at the top of the range, that’s a signal worth paying attention to.

For retention, turnover rate is the most apparent metric. Deeper insights, however, can come from comparing various compensation metrics, such as compa ratios, between departed and retained employees. If departed employees consistently show a pattern in range placement or compensation sentiment, pay may be a factor. But if they’re spread across the range or not showing deviation from the population who sticks around, something else might be driving the exits.

When internal data shows that compensation-adjacent problems are persisting despite competitive pay, that’s often a signal to look at other variables, such as departments with high turnover, managers with recurring complaints, or program structures that aren’t functioning as intended.

These aren’t metrics you can get from a market survey. They come from your own HRIS, ATS, performance data, and engagement scores, all brought together in a way that monitors and tells a cohesive story about how your program is performing.

## Synthesizing Market Benchmarks and Internal Data

Market data and internal data serve different purposes, and the most strategic leaders and advisors use both data sources to their strengths.

Market data provides credibility. It gives you a way to say here’s where we stand relative to the broader market and here’s why. Without it, it’s hard to make the case for any compensation decision with confidence.

Internal data tells you whether your compensation program is doing its job and if your market position is the right one to target against. When the picture painted by internal outcomes doesn’t line up with market benchmarks, you give yourself the justification to move away from constantly chasing market data to prove your compensation programs are a success.

The confidence to move away from market benchmarks when needed comes from understanding both inputs and knowing where each one falls short. This allows you to design a compensation program where tangible business outcomes are the output.

## See How Sequoia Tracks Everything That Matters

If you’re ready to build a compensation strategy around your business outcomes, not just your benchmarks, [connect with a Sequoia advisor](/content/form/consultation/index.html) to learn more.

\]\]>GLP‑1s in 2026: What Small & Mid‑Sized Employers Need to Knowhttps://www.sequoia.com/2026/03/glp-1-coverage-trends-2026/

Tue, 17 Mar 2026 13:25:00 +0000https://www.sequoia.com/?p=63512Small and mid sized employers face rising demand for GLP 1 coverage in 2026. Learn key trends, cost considerations, and steps to build a sustainable strategy.

The post [GLP‑1s in 2026: What Small & Mid‑Sized Employers Need to Know](/content/2026/03/glp-1-coverage-trends-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

The cost of GLP‑1 medications has become one of the most pressing concerns for employers heading into 2026. According to Sequoia’s [2026 Wellbeing Trends Report](/content/reports/2026-wellbeing-trends/index.html), steep price tags and continued demand have pushed GLP‑1 coverage conversations to the top of the benefits agenda for 35% of employers. Benefits leaders are evaluating how these medications fit into their budgets, people strategies, and overall wellbeing approach.

What’s clear from the data is that organizations aren’t approaching GLP‑1s casually. They’re asking: _What’s sustainable? What’s fair? What’s realistic for a company of our size?_ This article breaks down what employers need to know – and how the 2026 insights can guide your decision‑making.

## GLP‑1 Coverage Has Stabilized and Company Size Still Drives Adoption

Sequoia’s report shows that overall GLP‑1 coverage for weight loss has remained relatively steady year over year, but size remains the strongest predictor of adoption. About a quarter of all employers cover GLP‑1s for weight management overall. Coverage rises to nearly half (48%) among companies with more than 1,000 employees, while small and mid-sized employers remain in the low 20% range.

For smaller companies, this gap reflects a predictable reality:

- Budgets are tight
- Premiums continue to rise
- One or two high‑cost claimants can shift the entire financial picture

Still, even with cost constraints, employee awareness and expectations continue to rise, keeping pressure on employers to clarify their position. Employees increasingly expect support for metabolic health, prompting many small employers to reconsider how GLP‑1 medications fit into their offerings.

## Stabilization With Ongoing Uncertainty

Even as GLP‑1 coverage remains selective, employers remain deeply uncertain about whether to expand coverage in the coming year. According to the report, 55% of employers overall are not planning to add weight‑loss coverage next year, and another 44% remain unsure.

This hesitation reflects the tension many small and mid‑sized employers feel. While employees are asking for support, the financial implications are still difficult to predict. For organizations without deep claims visibility or large benefits budgets, the question often isn’t whether GLP‑1s are valuable, it’s whether they’re financially feasible right now.

This uncertainty sets the stage for the next major theme in the report: employers want to be supportive, but they also need structure and predictability.

## Employers Want GLP‑1 Access in a Controlled, Sustainable Way

The report indicates that employers aren’t rushing into broad, open‑ended coverage. In fact, 85% are approaching GLP‑1s with some type of guardrail that supports responsible spending and appropriate use. This often includes policies like:

- Prior authorization (most common with 67% requiring this)
- Stricter clinical criteria
- Enrollment in a weight management program
- Required step therapy

These controls are especially important for employers who need predictability in their benefits budgets. The data shows that most employers covering GLP-1s are using these levers to balance support for employees with the need to manage rising pharmacy costs.

The key takeaway is coverage isn’t binary. Employers are finding ways to offer access without losing financial stability.

## The Broader Wellbeing Landscape Matters, Too

While GLP‑1s are a major focal point for 2026, Sequoia’s trends report highlights that employers are making decisions with the full wellbeing ecosystem in mind. They aren’t treating these medications as standalone solutions. They’re one part of a larger wellbeing strategy that also prioritizes:

- Mental health support
- Preventive care
- Flexible digital tools
- Lifestyle and behavior programs

Employers are continuing to maintain investment across these areas, demonstrating a holistic wellbeing approach, even when individual benefits like GLP‑1s draw headlines.

## What HR and Benefits Leaders Can Do Today

For employers looking to offer a supportive and effective metabolic health program, but need to keep budget and practicality in mind, here are three steps to approach this:

### 1\. Decide what version of coverage makes sense for your size

Start narrow if needed. Many employers begin with diabetes‑related GLP‑1 coverage and revisit weight‑loss coverage later. This approach mirrors common adoption patterns in the report.

### 2\. Add one simple support that complements medication decisions

Instead of building complex care pathways, consider:

- Implementing a weight management program that provides clinical oversight and lifestyle modifications alongside medication
- Offering a fitness app or gym membership
- Access to virtual nutrition services

These smaller investments help employees pursue health goals with or without GLP‑1s and help make your benefit offering feel complete.

### 3\. Communicate clearly and proactively

One of the easiest wins for smaller employers is simply clarifying what the plan will cover, why, and how employees can get help if they have questions. Clear communication reduces confusion, prevents misaligned expectations, and builds trust.

## GLP‑1 Strategy in 2026: A Balanced Approach Wins

The theme emerging from Sequoia’s 2026 Wellbeing Trends Report is balance. Employers are concerned about the rising cost of GLP‑1s. They are evaluating coverage more thoughtfully than ever. And yet, they are finding measured, sustainable ways to incorporate these medications into broader wellbeing strategies that support their people and their budgets.

For small and mid‑sized employers especially, the opportunity isn’t to replicate a large‑enterprise program. It’s to understand the trends, make informed decisions that fit your reality, and build a wellbeing strategy that evolves with your workforce.

## Want more 2026 Wellbeing Trends?

Download the full [2026 Wellbeing Trends Report](/content/reports/2026-wellbeing-trends/index.html) to get more insights on GLP-1 coverage, mental health, and AI in benefits to help shape strategy at your organization.

\]\]>A Founder’s Guide to HSA, FSA, LSA, and Stipendshttps://www.sequoia.com/2026/03/founders-guide-hsa-fsa-lsa-stipends/

Mon, 16 Mar 2026 19:58:21 +0000https://www.sequoia.com/?p=63508Learn how HSAs, FSAs, LSAs, and stipends work, and how to choose the right mix for your growing team. A practical benefits guide for early‑stage founders.

The post [A Founder’s Guide to HSA, FSA, LSA, and Stipends](/content/2026/03/founders-guide-hsa-fsa-lsa-stipends/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Founders often end up designing a benefits program sooner than expected. The first few hires might not require much structure, but as the team grows, candidates begin asking more pointed questions about benefits. That’s usually the moment when the variety of available programs becomes clear.

HSAs, FSAs, LSAs, and stipends are some of the most common benefits programs companies use today. They often appear in the same conversations, but they serve different roles. Understanding how each one works, and how they fit together, makes it easier to build a benefits program that supports your team today and stays flexible as you grow.

This guide gives you a practical starting point.

## Two Groups to Keep in Mind

Before you dig into the details, it helps to sort these programs into two buckets.

### Health-related, tax‑advantaged accounts

- Health savings account (HSA)
- Flexible spending account (FSA)

### Company‑funded perk programs

- Lifestyle spending account (LSA)
- Stipends

## HSA: One of the Most Tax-Advantaged Benefits

**What it is**

An HSA is a tax‑advantaged account employees can use to pay for qualified medical expenses. HSAs are tied to high‑deductible health plans (HDHPs).

**How it works**

Employees and employers can both contribute pre‑tax dollars. The balance can be invested and grow over time, and employees can use the funds for qualified medical expenses without paying tax on withdrawals. Any unused money rolls over each year and stays with the employee if they change jobs.

**Where it fits**

Offer an HSA when you include an HDHP in your medical lineup. Employees who want lower premiums and are comfortable with a higher deductible often value an HSA. It works well for team members who appreciate long‑term savings potential.

**What to keep in mind**

- You can seed HSAs to encourage adoption of the HDHP.
- Employees must be enrolled in an HSA‑qualified HDHP to contribute.
- Many companies offer an HDHP with HSA alongside a PPO to support different preferences.
- HSA funds can be invested in stocks, bonds, ETFs, mutual funds, and more

## FSA: Pre-Tax Spending for Healthcare and Dependent Care

**What it is**

An FSA is an employer‑established account that lets employees set aside pre‑tax dollars for eligible out‑of‑pocket costs. The company can also contribute if you choose.

**How it works**

Employees elect an annual amount and use the funds for eligible expenses during the plan year. FSAs come in three forms:

- **Healthcare FSA** for medical, dental, and vision expenses
- **Dependent care FSA** for eligible childcare or eldercare
- **Limited purpose FSA** for employees with an HSA; it covers only dental and vision to maintain HSA eligibility

Plans include either a small carryover or a short grace period. Because funds are “use-it-or-lose-it” (don’t roll indefinitely), elections should align with expected use in the plan year

**Where it fits**

An FSA supports employees who expect ongoing healthcare or dependent care expenses but may not enroll in an HDHP with an HSA.

**What to keep in mind**

- FSAs are available regardless of which medical plans you offer.
- Clear communication helps employees right‑size their elections amounts.
- If you offer an HSA, employees can only use a limited purpose FSA for dental and vision.

## LSA: Flexible Support for Wellness and Work‑Life Needs

**What it is**

An LSA is an employer‑funded budget employees can use for approved lifestyle or wellness expenses.

**How it works**

You choose the spending categories and the allowance amount. Employees submit eligible expenses for reimbursement, and the company pays the approved amount through payroll. Categories often include fitness, mental health services not covered by insurance, home office equipment, learning, or commuting. Because categories are customizable, LSAs adapt well to different team needs and locations.

**Where it fits**

An LSA works well when you want to support well‑being, productivity, or day‑to‑day needs in a flexible way. It creates a consistent experience for distributed or hybrid teams.

**What to keep in mind**

- Reimbursements are taxable, so coordinate with payroll on how they’ll be processed.
- A platform helps manage documentation and policy rules as your team grows.
- Clear categories and examples keep the program consistent.
- Starting with a focused set of categories makes rollout smoother.

## Stipends: Straightforward Support for Specific Needs

**What it is**

A stipend is a company‑funded allowance for a defined purpose such as home office equipment, internet service, wellness activities, or learning.

**How it works**

You set the amount, purpose, and frequency, and employees either receive the funds directly or submit receipts depending on your policy. Stipends can be one‑time or ongoing and are processed through payroll as taxable income. The simple rules make them easy to launch and manage.

**Where it fits**

Stipends are helpful when you want a lightweight way to support specific needs without adding a formal program or platform.

**What to keep in mind**

- Clear guidelines reduce exceptions and keep the process manageable.
- Stipends are taxable, so coordinate with payroll on timing and reporting.
- Manual tracking becomes harder as your team grows.
- If usage expands or categories multiply, an LSA usually scales better.

## Choosing the Right Set Up for Your Company

These programs often show up together inside a benefits package, which can create the impression that they’re interchangeable. They aren’t. Each serves a different role, and together they can create a well‑rounded experience.

As you choose what to offer, consider:

- **Company stage:** Smaller teams can manage fewer programs; larger teams need structure.
- **Team needs:** Employees at different life stages value different types of support.
- **Administrative capacity:** Some programs require more oversight.
- **Budget per employee:** Costs rise as headcount grows.
- **Your talent market:** Benefits can influence how competitive you appear to candidates.

## What Your Benefits Mix Might Look Like at Different Growth Stages

The benefits you offer will change alongside your company. The stack that works for a 10-person startup will look different from one supporting a team of 150. Here are some examples:

**Seed stage (5–20 employees)**

The focus here is simplicity and coverage. A common setup might include:

- One or two health plans
- HSA eligibility if the plan allows it, sometimes with a modest employer contribution
- A small LSA for wellness or learning
- A targeted home-office stipend

At this stage, companies often skip FSAs due to limited demand and administrative overhead.

**Early growth (20–75 employees)**

As hiring accelerates, benefits begin to influence recruiting outcomes more directly. Companies often expand their stack to include:

- Two to three health plan options, such as an HDHP, a PPO, and an HMO
- HSA contributions for employees on the HDHP
- Healthcare FSA
- Dependent care FSA
- LSA with broader categories

This stage is where many companies move away from broad stipends to more structured benefits.

**Scaling stage (75–200 employees)**

Benefits programs become more comprehensive as headcount grows. Companies often offer:

- Multiple health plan options, including richer buy-up options
- Larger HSA employer contributions
- Healthcare and dependent care FSAs
- LSAs
- Commuting stipends

The program starts to resemble the structure seen at larger companies, though many startups maintain flexibility through LSAs.

## Pulling It All Together

Building a benefits program for a growing team comes with a lot of choices, but it becomes much more manageable once you understand the purpose of each option. HSAs and FSAs support healthcare spending, while LSAs and stipends offer flexibility for wellness, productivity, and day‑to‑day needs. You don’t need to offer everything right away. Start with the programs that fit your team and budget, then expand as you grow.

A little clarity now saves time later and makes it easier to build a benefits experience that feels supportive, intentional, and aligned with how your company operates.

## Talk Through Your Options With a Sequoia Advisor

Every company’s path looks a little different. If you want help evaluating which programs make sense for your stage, a Sequoia advisor can walk you through the tradeoffs and help you design a setup that fits your team today and scales with you. [Connect with a Sequoia advisor](/content/form/consultation/index.html) to get started.

\]\]>HR FAQ: Managing Employee Benefits During a RIFhttps://www.sequoia.com/2026/03/managing-benefits-during-rif/

Thu, 12 Mar 2026 13:04:46 +0000https://www.sequoia.com/?p=63485Learn how to handle COBRA, FSAs, compliance, and communication during a RIF. Practical guidance to help HR teams manage reductions with clarity and care.

The post [HR FAQ: Managing Employee Benefits During a RIF](/content/2026/03/managing-benefits-during-rif/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Lately, I’ve been hearing from more HR leaders who are working through a potential or upcoming reduction in force (RIF). Many companies aren’t doing large, sweeping reductions. Instead, they’re making smaller adjustments more often, taking a more measured approach than we saw in the hyper‑growth years.

Even when the reductions are small, they raise a lot of questions about coverage, timing, compliance, and communication. And because most teams don’t go through RIFs often, it’s completely normal to feel unsure about where to start.

Below are the questions I hear most often, and how I walk HR and people leaders through them.

## Should we offer COBRA subsidies?

There’s no universal answer here. Start with your organization’s values and how you want people to feel when they leave.

A quick refresher: COBRA allows former employees to stay on your group health plan by paying the full premium. A COBRA subsidy means you cover some or all of that cost for a set period. Here’s how I approach this with clients.

**Think about whether the decision aligns with your culture**. If you’ve built a reputation for taking care of people, that shouldn’t stop the moment employment ends. Support offered during offboarding often shapes your brand as much as the experience people have while working for you.

**Understand the difference between a subsidy and severance**. A true COBRA subsidy requires direction to the COBRA administrator to bill the employee a lower amount (or nothing). [Severance](/content/2026/02/severance-plan-data-2026/index.html) with the intent of covering COBRA is just money. You can’t control how it’s used, which is sometimes a feature and sometimes a drawback.

**Look at your funding arrangement**. If you’re level‑funded or self‑funded, plan for higher claims usage from people who stay on COBRA, especially if you’re covering the premiums. People tend to catch up on care while on COBRA, especially when new coverage is uncertain.

**You’re not required to offer subsidies**. Many HR teams assume a COBRA subsidy is expected, but it truly depends on your philosophy, financial situation, and the employee experience you want to create.

## What happens to employees’ FSA balances after a RIF?

This is one of the trickiest and most emotional parts of offboarding. FSA access ends on the employee’s termination date, and any unused funds are forfeited.

Here’s what you need to know:

**FSAs are employer-owned funds**. Employees repay their elections over the year, but the employer fronts the full amount at the beginning. That’s why remaining balances can’t simply be “returned.”

**FSA COBRA is possible, but almost no one elects it**. It’s technically COBRA‑eligible, but very few people sign up because they’d be paying a premium to access money they could have used earlier.

**Clear communication matters**. So many issues arise simply because employees didn’t realize their FSA coverage would end immediately. If possible, give impacted employees advance notice and remind them what they can still claim or spend before their termination date.

**Do a quick internal review of balances**. If someone elected $3,000 and contributed almost nothing before being included in the RIF, encouraging full spend-down could create losses for the company. It’s not a reason to hold back, but important context to understand.

## Could a RIF trigger re‑rating or mid‑year changes to our benefits plans?

Possibly. And especially if the reduction happens close to your renewal window.

A carrier may choose to re‑rate (update your premiums) if your headcount drops enough to affect your risk profile. Many carriers start to consider this when the drop is around 10% or more.

Here’s how it plays out:

- Renewals and market quotes are based on your census at the time they’re requested.
- If you go through a RIF shortly after receiving quotes, carriers may revisit pricing based on the smaller group.
- This can create unexpected cost increases and, in some cases, the need to re-open enrollment.

Small-group fully insured plans (generally under 100 employees) are the exception. Those rates are set and can’t be re-rated mid-year.

The best thing you can do is involve your benefits consultant early. We can talk to carriers proactively and avoid surprises.

## Do compliance requirements change when our headcount drops?

Not immediately. Benefits compliance thresholds almost always rely on averages over time, not a moment-in-time snapshot.

For example:

- ACA Applicable Large Employer (ALE) status is based on a 12‑month average of 100 or more full-time employees
- Dropping from 101 to 99 employees mid-year doesn’t necessarily change your status for the current year.

Similar rules apply to ERISA filings and other benefits compliance triggers. A RIF today usually affects next year’s obligations, not today’s.

## What’s the best way to communicate benefits information to departing employees?

This is where you can make a tough situation feel more manageable for everyone involved.

Here’s what I always recommend:

**Have your offboarding materials reviewed by your consultant**. Even the best HR teams miss timing details or language that creates confusion later. A quick review often saves a lot of frustration.

**Keep COBRA guidance high-level**. Your COBRA administrator should handle specifics. If a former employee asks anything beyond basic expectations, direct them back to the administrator. That’s their job, and it reduces your legal exposure.

**Provide a simple “what to expect” summary**. Employees appreciate a clear, friendly FAQ before they receive the more formal vendor packets.

**Make sure internal teams are aligned**. Managers, HR, payroll, and your consultant should all be working from the same playbook.

## How should we support remaining employees after a RIF?

Once the reductions are complete, it’s important to think about how you’ll support the team that’s still in place. Your remaining employees will look to you for stability, and benefits play a bigger role here than many people realize.

**Leave eligibility and contributions unchanged mid-year**. Any adjustments can wait for renewal, but updated headcount should inform your long-term strategy.

**Promote mental health resources**. Most companies have access to an embedded EAP through life or disability insurance, or emotional wellbeing tools through their health carrier. If the RIF is substantial, consider a standalone EAP. These can be deployed quickly and offer more robust, hands-on support.

**Remind employees what’s already available**. People forget how many resources are built into their plans. A simple message that rounds up available support can make a difference.

## How can we avoid administrative errors during a RIF?

When multiple employees are being termed at once, small misses can snowball quickly. Here are key steps:

**Begin with a dialogue that includes your consultant and COBRA administrator**. Clarify exactly what data moves automatically and where manual updates are needed, especially around subsidies.

**Know your retro-termination windows**. Most carriers allow up to 60 days. After that, corrections get difficult.

**Double-check every system**. Make sure your HRIS, payroll, and benefits platforms are in sync to avoid overbilling, coverage gaps, or incorrect COBRA notices.

**If you’re new to this, ask for guidance**. RIF administration isn’t intuitive the first time you go through it, and your consultant can walk you through the nuances.

## When should we bring our benefits advisor into planning a RIF?

As early as possible. Even if you’re still in the exploratory stage, looping in your consultant helps you:

- Understand financial impacts
- Avoid compliance pitfalls
- Prepare for higher claims activity from COBRA users
- Set up communication and admin workflows
- Prevent avoidable mistakes

We keep everything confidential and only share internally when needed. Early involvement gives you better information, clearer timelines, and fewer surprises later.

## Not sure where to start?

If you’re planning a RIF or want support thinking through your approach, our team is here to help. [Connect with a Sequoia advisor](/content/form/consultation/index.html) to talk through your options and get guidance tailored to your situation.

**More articles by Tanner Herpst:**

- [Benefits Renewal Costs Are Surging: Here’s How Smart Employers Stay Ahead](/content/2025/10/managing-benefit-renewal-costs/index.html)
- [Open Enrollment: Double Down on Communication as Costs Rise](/content/2025/10/open-enrollment-strategy-2025/index.html)

\]\]>March Wellbeing Focus: Healthy Eating for Busy Lives, Women’s History Month, and Addressing Current Eventshttps://www.sequoia.com/2026/03/sequoia-wellbeing-toolkit-march-2026/

Mon, 09 Mar 2026 16:10:39 +0000https://www.sequoia.com/?p=63407Highlights of this month’s resources for Sequoia clients to help them support their employees.

The post [March Wellbeing Focus: Healthy Eating for Busy Lives, Women’s History Month, and Addressing Current Events](/content/2026/03/sequoia-wellbeing-toolkit-march-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

With National Nutrition Month and Women’s History Month underway, March is a good time for employers to promote resources that support healthy eating and celebrate women’s contributions. Sequoia’s theme, Healthy Eating for Busy Lives, highlights simple, sustainable ways to stay energized, and this month’s wellbeing toolkit provides ready-to-use materials to help you share nutrition tips with your workforce. Our supplemental guides also offer ideas and content for honoring Women’s History Month and acknowledging the impact of current global events, including escalating developments in the Middle East.

## Spotlight Healthy Eating for Busy Lives Theme

Eating well doesn’t have to be complicated or time-consuming. Sequoia’s toolkit for clients focuses on simple and quick ways to prepare nutritious meals and snacks:

- **Essentials for a Healthy Kitchen**, a guide of suggested ingredients to stock in your fridge, freezer, and pantry
- **March 18 Live Webinar — Nourish in No Time: A Live Cooking Experience**, a session with Lead Chef and Nutritionist, Suzy Destarac from FitPros. This is open for anyone to attend. [**Register here**](/content/lp/wellbeing-events/index.html).

We recommend highlighting relevant nutrition-related offerings you may have, such as nutritional counseling through your medical plan or nutrition content available through your EAP or wellbeing platform.

## Honor and Celebrate Women’s History

March also offers a dedicated moment to recognize the leadership, influence, and experiences of women across your organization. Employers can use this month to uplift women’s voices and ensure equitable access to wellbeing resources.

Recommended areas to spotlight include:

- Preventive health services (annual exams, vaccines, contraceptives, mammograms)
- Fertility and family-planning resources
- Caregiving and support programs
- Hormonal health and menopause support

Engaging activities may include hosting learning sessions, amplifying employee stories, supporting women-owned businesses, and offering professional development opportunities such as mentorship circles.

## Support Employees Impacted by Recent Events

Global events, including escalating developments in the Middle East, continue to impact employees in deeply personal ways. Employers play an important role in offering stability, empathy, and clarity during uncertain times.

Suggestions on what to share with employees:

- Email outreach
- Guidance on sharing mental health and wellbeing benefits
- Connections to local resources
- Opportunities to connect and support one another

Sequoia clients can access tools for this month by logging into Sequoia OS and going to the Wellbeing section.

If you’re not a Sequoia client and are interested in learning more about how Sequoia can support your benefits and wellbeing program, [connect with a Sequoia advisor](/content/form/consultation/index.html).

\]\]>HR Prioritization Strategies People Leaders Need in 2026https://www.sequoia.com/2026/03/hr-prioritization-strategies-small-companies/

Thu, 05 Mar 2026 13:32:32 +0000https://www.sequoia.com/?p=63315Lean HR teams face growing demands. Learn how small or new companies can stay focused, manage rising requirements, and build capacity with smart prioritization.

The post [HR Prioritization Strategies People Leaders Need in 2026](/content/2026/03/hr-prioritization-strategies-small-companies/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

HR is quickly becoming one of the most complex and demanding functions in small and growing companies. Beyond everyday hiring, onboarding, and employee support, teams face a steady wave of new compliance rules, expanding state mandates, and rising benefits costs. For lean HR teams, the workload grows rapidly, often without additional headcount to support it.

So how do smaller people teams keep up without burning out or losing sight of what matters? The answer is a clear approach to prioritization. Here’s a practical framework to help decide what deserves focus now and what can wait.

### 1\. Anchor Priorities to the Company’s Top Business Objectives

Before committing time or energy to a request or project, start with a simple question: What company goal does this support?

If a project doesn’t advance hiring, retention, performance, or risk management, it may not belong on this quarter’s list. With limited capacity, HR leaders need to make deliberate choices about where their time goes.

Once something passes that test, consider the tradeoff between effort and benefit. Some initiatives can have an outsized impact with relatively little work, while others demand large amounts of time for minimal gain. Lean teams benefit from being honest about which is which.

### 2\. Focus on the Highest‑Risk, Highest‑Leverage Talent Moments

Every company has certain points in the employee experience where things tend to go off track. These moments can create confusion, frustration, or even legal exposure if handled poorly.

Start by spotting the biggest pressure points in the employee lifecycle:

- Where do issues most often recur?
- Which moments lead to the most rework, delays, or complaints?
- Where does leadership most want to see improvements?

By shaping your work around these areas, you avoid spending energy on tasks that feel urgent but don’t meaningfully improve the employee experience or support the business.

### 3\. Separate Core Work from Improvement Work

Small HR teams often feel tempted to fine‑tune processes before the basics are firmly in place. But improvement work is far easier, and far more useful, once the core structure is set.

Core people operations include:

- **Defining** job architecture and leveling
- **Establishing** compensation benchmarks and pay ranges
- **Running** a repeatable hiring process
- **Clarifying** manager expectations
- **Setting up** a reliable data and documentation system

Once these pieces are steady, then it makes sense to streamline, automate, or refine. Until then, improving the basics one step at a time is both more realistic and more sustainable.

### 4\. Protect Capacity for Emerging Needs

Unexpected work will always find its way to HR. New regulations, urgent manager situations, last‑minute reporting requests, and policy updates surface all year long. Smaller teams stay more effective when they leave room for the unexpected, rather than filling every available hour with planned work.

A few ways to build that kind of buffer into your operations:

- **Set limits** on how many new initiatives you take on each quarter
- **Standardize and templatize** recurring tasks so you aren’t reinventing them
- **Use tools, vendors, and automation** for reminders, reporting, and documentation
- **Adopt a one‑to‑many mindset**, moving repeatable support into systems rather than individual interactions
- **Improve one process each month** to reduce friction over time
- **Rely on partners**, especially for compliance tracking and coordination

Protecting capacity keeps the team steady when priorities change and frees up time for the work that matters most.

### 5\. Get Support Outside the HR Team

Small HR teams often carry the weight of the entire employee experience, but they shouldn’t be the only ones doing so. The organization needs to participate, especially leaders and managers.

Some ways to extend your reach:

- Encourage executives to reinforce people initiatives
- Train managers so they can handle more day‑to‑day guidance
- Use vendor programs you already pay for, instead of building from scratch
- [Consider a PEO](/content/solutions/outsourcing/index.html) or outsourcing services to offload payroll, HR infrastructure, [compliance](/content/risk/compliance/index.html) oversight, and benefits administration

With the right support system, even a small HR team can operate with the bandwidth of a much larger one.

#### If Your People Team Is Stretched Thin Today, You Don’t Have to Wait for More Headcount

The right partner can take meaningful pressure off your HR function. Whether you want to expand your capacity through the Sequoia One PEO or hand off specific people operations tasks to our expert advisors, Sequoia gives small teams the support they need to stay steady and move faster. [Connect with a Sequoia advisor](/content/form/consultation/index.html) to explore the level of help that fits your company’s stage of growth.

\]\]>People Investment Perspectives: Libby Juelsgaard, Function Healthhttps://www.sequoia.com/2026/03/people-investment-perspectives-libby-juelsgaard-function-health/

Mon, 02 Mar 2026 18:54:26 +0000https://www.sequoia.com/?p=63203People leader Libby Juelsgaard of Function Health shares insights on proactive health, burnout, and high performance, plus her advice for HR teams in 2026.

The post [People Investment Perspectives: Libby Juelsgaard, Function Health](/content/2026/03/people-investment-perspectives-libby-juelsgaard-function-health/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

In this new series, we’re spending time with a few of our Sequoia clients at the world’s most innovative companies. These leaders bring deep experience to shaping their organizations and together they represent the supportive, people-focused community that continues to inspire us.

Today, we’re excited to chat with Libby Juelsgaard, SVP of People at Function Health. With more than two decades of experience building exceptional teams at high‑growth companies like Lyft, Twitter, and Mural, Libby brings both wisdom and heart to her work. Function Health, recently named a TIME 100 Most Influential Company, is driven by an audacious and human-centered mission: empowering everyone to live 100 healthy years.

It’s a mission that’s resonating widely. In November 2025, Function Health raised an oversubscribed $298M Series B led by Redpoint Ventures.

Below, Libby shares how she approaches health, a few of the ideas shaping her work today, and an incisive hot take.

### Sequoia: How is your company approaching health like mental health, fitness, and stress-related support as work becomes more tech-driven?

Libby: Burnout is deeply personal. The same input does not produce the same outcome for every person, so there is no universal solution a company can perfectly design.

That said, leaders have a responsibility to create an environment where burnout can be talked about openly and safely. A manager’s job is not to fix it, but to listen and help someone find the right level of support to get out of the red zone.

I think about elite teams a lot. High performance requires recovery. Managing your energy is part of the work, and our job as leaders is to create the clarity and space for people to do that well.

### Sequoia: What’s one benefit you think more companies will add in 2026 that wasn’t common before?

Libby: I believe more companies will add proactive, data-driven health benefits that give employees real ownership over their health.

We are at an inflection point. For the first time, people have access to comprehensive health data with actionable insights that go beyond what traditional care offers. New tech innovations are removing the typical pain points and barriers that have made proactive care a challenge for many. Data does not replace expertise; it enhances it. When paired with context, it helps us move from reactive care to proactive health.

When employees feel informed and empowered, not confused or dependent, the ripple effect on their lives and our workplaces is real.

### Sequoia: If you could give one piece of advice to HR leaders setting their 2026 people-spend strategy, what would it be?

Libby: The most expensive line item is not benefits or software. It is the company’s time.

My hot take: HR has lost the plot on performance management. Overly taxing performance systems with ratings and calibrations create the illusion of rigor while consuming enormous leadership energy without reliably improving outcomes.

If you are serious about people spend, audit where your organization is investing its time. Protect it. Invest in clarity, shared standards, direct feedback, and ownership.

Design for measurable impact, not optics. Time is the most valuable resource you manage.

_Libby Juelsgaard is SVP of People at Function Health, where she leads the company’s people strategy in service of its mission to help 8 billion people live 100 healthy years. She partners closely with leadership to build high performance, high ownership teams capable of scaling bold, category defining work._

_Libby brings more than 20 years of experience leading People organizations at high growth companies including Twitter, Lyft, and Mural. She is passionate about building elite teams, designing for clarity and impact, and creating environments where people feel empowered to do the best work of their careers. She is also a mom of three and deeply committed to building a life that honors both ambition and family._

_In March, you can catch Libby speak on the panel “Designing the Workplace for a Hundred-Year Life” at [Transform 2026](http://www.transform.us/) alongside Ginny Cheng, Global Head of Talent, OURA; Cher Murphy, Partner and Practice Leader, ON Partners; and Rochelle Noone, CHIRO, Stanford Medicine Partners._

_Function Health partners with Sequoia on their Benefits, 401k, Wellness, and compensation programs, working with Sequoia Consultants Mark Mangiola and Jeff Coyne, Eileen Heyrich, Vivek Vishal, and Matt Gromek._

\]\]>Post-Merit Planning: How HR and Finance Leaders Stay Ahead All Yearhttps://www.sequoia.com/2026/02/post-merit-planning-compensation-strategy/

Wed, 25 Feb 2026 14:54:19 +0000https://www.sequoia.com/?p=63153Learn how HR and finance teams use post‑merit planning to analyze spend, gather employee feedback, and refine compensation strategy before the next merit cycle.

The post [Post-Merit Planning: How HR and Finance Leaders Stay Ahead All Year](/content/2026/02/post-merit-planning-compensation-strategy/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

For most organizations, the merit cycle closes after raises are delivered, bonuses are paid, and equity refreshes are communicated. HR and finance teams move on. But according to Christina Byrd, compensation advisor at Sequoia, this is where disciplined organizations separate themselves.

“You’ve done the work of benchmarking, resetting salary ranges, defining bonus targets and equity refreshes, aligning with leadership. The question you need to answer after that is, ‘How successful was our merit cycle?’”

That question defines post-merit planning. Here’s how to measure your program’s success and plan for next year’s.

## What Is Post-Merit Planning?

The post-merit review is a structured evaluation of whether your [compensation philosophy](/content/2024/12/compensation-philosophy-essentials/index.html) worked in practice and what needs refinement before the next [merit cycle](/content/2024/11/merit-cycle-essentials/index.html).

In Q1, HR and compensation teams are in execution mode. As Byrd put it, they’re “boots on the ground,” delivering outcomes. Q2 and Q3 should look different.

“It’s more holistic,” she said. “You’re incorporating feedback from the merit cycle, but you’re also thinking about compensation from a look-forward, step-back perspective.”

The focus moves from administration to alignment with questions like:

- Did top performers feel meaningfully rewarded?
- Did target performers understand why they received what they did?
- Were lower performers surprised?
- Did actual spend align with your pay-for-performance approach?

If those questions aren’t asked and addressed post-merit cycle, compensation becomes reactive.

“Comp is a year-long process,” Byrd said. “If you’re not thinking about it in Q2 and Q3, Q1 becomes much more painful because that’s when leaders finally surface all the concerns they’ve been carrying.”

## The Q2-Q3 Opportunity Most Companies Miss

Many organizations focus intensely on execution in Q1 and budgeting in Q4, overlooking the chance for reflection and course correction in between.

“If you only think about comp during administration and budgeting, you miss a golden opportunity to collect feedback and think strategically,” Byrd said.

A disciplined cadence looks like this:

- Q1: Merit increases, bonuses, and equity refreshes delivered
- Q2: Compensation questions embedded in pulse surveys
- Q2–Q3: Programmatic review and objective setting
- Q4: Benchmarking and budget approvals

Q2 and Q3 are where strategy is shaped.

## What to Measure

Post-merit review starts with disciplined financial analysis. At minimum, examine:

- Allocated budget vs. actual spend
- Compensation heat maps by performance rating
- Spend by level and function
- Performance distribution vs. compensation distribution
- Promotion percentage

Promotion rates are often the hidden budget risk.

“If you don’t have guardrails around what you expect your promotion percentage to be, those are some of the most expensive compensation changes,” Byrd said. “You can see companies overextending pretty quickly.”

But metrics only matter in context.

“These metrics are heavily dependent on your compensation philosophy,” she said. “If that’s well defined, it becomes relatively obvious what you should be measuring.”

You’re evaluating spend and validating whether your philosophy held up under real-world pressure.

## Get Your Employees’ Perspective

While financial reconciliation tells you what happened, employee feedback tells you how your plan landed.

Byrd recommends surveying employees shortly after the merit cycle closes and segmenting results. Build questions around fairness and comprehension, such as:

- Do you feel fairly compensated for your role and performance?
- Do you understand how compensation decisions were made?
- Do you understand why rewards are tied to specific outcomes?
- Do you understand how equity works?

For deeper insight, segment answers by performance level and function. And if leaders are hesitant to ask these questions because they expect low scores?

“That doesn’t mean you shouldn’t track it,” Byrd said. “That feedback is your justification to explore and refine programs. If you ask anyone whether they’re happy with their compensation, most people will say no. So, if you’re above 50%, that’s actually a relatively good score.”

## Where Overspending and Exceptions Often Cluster

When reconciling plan versus actual spend, patterns often emerge, usually around groups that outperformed what you modeled for.

These often appear in teams where there’s been high investment, such as AI-focused teams, engineering, product, strategy, and business development.

“If you’ve invested heavily in recruiting high-caliber talent, there’s a good chance you’ll see overperformance in those buckets,” Byrd said.

Overspending isn’t automatically a problem. Your answers to the questions below will help you determine whether it should raise concern:

- Did performance justify it?
- Were guardrails defined in advance?
- Does it align with your compensation philosophy?

## Design and Validate Your Comp Program for AI Talent

[AI talent is increasingly treated as an exception in compensation design](/content/lp/2026-comp-equity-report-comp-consultation/index.html). Byrd sees companies using milestone-based bonuses, equity tied to AI innovation KPIs, and targeted retention programs.

Post-merit review is where you confirm whether those investments are driving retention or simply increasing cost.

## Structural Tensions That Surface Mid-Cycle

The review process often exposes structural friction, including large market movements not captured in Q4 budgeting, tension between market competitiveness and pay-for-performance, and promotion spikes beyond modeled assumptions.

“If big market movements haven’t been captured as part of the Q4 budgeting process, that can sneak up on you,” Byrd said. “It becomes a question of whether you use your budget to stay competitive or to reward performance.”

That conflict should be resolved strategically in Q2 and Q3, not during Q1 execution.

## The Decisions That Shape Next Year

By the end of the post-merit review phase, HR and finance leaders should know where to focus before Q4 benchmarking begins. You may decide to:

You may decide to:

- Conduct deeper market benchmarking for specific functions
- Tighten promotion guardrails
- Sharpen top-performer differentiation
- Redesign bonus or equity programs for critical teams
- Improve compensation communication

“What companies are really deciding is where they need to invest time and resources in refining programs before the next budgeting process,” Byrd said.

Post-merit planning is where companies can become strategic about compensation, and where prepared organizations gain an advantage before the next cycle even begins.

## Frequently Asked Questions About Post-Merit Planning

**What is a compensation program review process?**

A compensation program review process is a structured evaluation of a company’s pay practices, including salary ranges, bonuses, equity, and promotions. It assesses whether compensation aligns with [market benchmarks](/content/total-comp-benefits/benchmarking/index.html), budget assumptions, performance outcomes, and the company’s compensation philosophy.

**What is post-merit planning?**

Post-merit planning is the review that happens after merit increases, bonuses, and equity refreshes are delivered. It evaluates compensation outcomes, employee sentiment, and financial alignment to refine strategy before the next budgeting and benchmarking cycle.

**When should a company conduct a post-merit review?**

Most companies conduct post-merit reviews in Q2 and Q3, after Q1 merit execution. This allows HR and finance leaders to gather employee feedback, analyze compensation spend, and adjust strategy before Q4 budget approvals.

**Who owns post-merit planning?**

HR and compensation teams typically lead post-merit planning, with finance as a key partner. Executive leadership and CFOs often engage as insights inform budget decisions and long-term compensation strategy.

**What metrics should be reviewed after a merit cycle?**

Key metrics include:

- Budget vs. actual compensation spend
- Compensation distribution by performance rating
- Promotion percentage
- Spend by level and function
- Alignment with pay-for-performance philosophy

Promotion rates and high-performer pay concentration are major cost drivers.

**Why is promotion percentage important in compensation planning?**

Promotions increase fixed compensation costs and often trigger structural pay adjustments. Without predefined guardrails, promotion rates can exceed budget assumptions and create long-term financial pressure.

What employee feedback should companies collect after merit increases?

Organizations should measure:

- Perceived fairness of compensation
- Understanding of how pay decisions were made
- Clarity around equity and incentive programs
- Alignment between performance and rewards

Segmenting results by performance level and function improves insight quality.

**How does post-merit planning reduce retention risk?**

By reviewing compensation outcomes and sentiment among top performers and critical teams, companies can identify dissatisfaction early and refine programs before attrition increases.

**What happens if a company skips post-merit planning?**

Compensation decisions become reactive. Market shifts may go unaddressed, promotion costs can escalate, performance differentiation weakens, and the next merit cycle becomes compressed and more contentious.

**Is post-merit planning only for large companies?**

No. While more common in mid-sized and enterprise organizations, early-stage companies benefit from implementing post-merit reviews early. Establishing discipline around compensation analysis reduces scaling challenges and budget surprises.

\]\]>What TrumpRx and the FTC Settlement With Express Scripts Means for Employer Drug Costshttps://www.sequoia.com/2026/02/what-trumprx-and-the-ftc-settlement-with-express-scripts-means-for-employer-drug-costs/

Fri, 20 Feb 2026 17:27:13 +0000https://www.sequoia.com/?p=63083Learn how TrumpRx and the FTC’s settlement with Express Scripts could influence employer pharmacy benefits, drug pricing transparency, and future cost-management strategies.

The post [What TrumpRx and the FTC Settlement With Express Scripts Means for Employer Drug Costs](/content/2026/02/what-trumprx-and-the-ftc-settlement-with-express-scripts-means-for-employer-drug-costs/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Two major developments in prescription drug pricing are making headlines. One is the federal rollout of TrumpRx, a consumer-facing drug pricing website. The other is a landmark FTC settlement with Express Scripts, one of the country’s largest pharmacy benefit managers (PBMs).

For employers, these announcements have raised understandable questions. Do these developments change how pharmacy benefits should be designed or managed? Do they signal meaningful cost relief, or are they largely symbolic?

The answer is nuanced. While both developments reflect growing pressure on drug pricing, their implications for employer-sponsored health plans are very different. Understanding that distinction is critical to avoid overreaction on one hand and complacency on the other.

## What Is TrumpRx?

[TrumpRx.gov](https://www.whitehouse.gov/articles/2026/02/president-trump-launches-trumprx-gov-delivering-massive-immediate-savings-to-millions-of-americans/) is a federal, direct-to-consumer prescription drug pricing website launched in early February 2026. It lists a limited set of medications and directs users to manufacturer or discount purchase options where they can buy drugs at advertised cash prices. The federal government does not sell drugs through the site.

TrumpRx emerged amid increasing public frustration with high list prices, opaque rebate structures, and the slow pace of traditional drug pricing reform. The platform was designed to offer immediate, highly visible price relief for select medications by bypassing traditional pharmacy benefit channels.

At launch, TrumpRx included approximately 43 medications, largely brand-name drugs used to treat conditions such as [diabetes, obesity, and infertility](https://www.npr.org/2026/02/05/nx-s1-5702493/trumprx-drug-prices-discounts).

Several points are important for employers to understand:

- TrumpRx pricing is cash-only and generally sits outside employer health plans, meaning purchases do not count toward deductibles or out-of-pocket maximums.
- For many insured patients, existing plan pricing is often lower than TrumpRx cash prices, particularly when generics or preferred formulary options are available.
- Many drugs included on the platform already have lower-cost generic or alternative discount options available through current benefit designs.

This cash-only structure creates an important consideration for employers. While off-benefit pricing may reduce immediate out-of-pocket costs for certain individuals, prescriptions filled outside the benefit do not count toward deductibles or out-of-pocket maximums and may not be captured in plan claims data. That can affect care coordination, utilization management, and overall visibility into pharmacy trends. For employers, the question is not simply whether a price is lower, but whether that pricing sits inside or outside the benefit structure.

In practice, TrumpRx does not fundamentally change drug pricing economics. It centralizes and publicizes manufacturer cash pricing that, in many cases, already exists through other direct-to-consumer channels.

For employers using traditional, rebate-driven [PBM arrangements](/content/2025/05/how-to-choose-the-optimal-pharmacy-benefit-partner/index.html), the platform may surface lower cash prices for certain drugs that were not previously emphasized within standard benefit communications. It may also provide an option for employees without coverage for therapies such as weight loss medications or fertility treatments, where off-benefit pricing could reduce out-of-pocket exposure.

However, for employers already using [transparent or pass-through PBM models](https://www.ftc.gov/news-events/news/press-releases/2026/02/ftc-secures-landmark-settlement-express-scripts-lower-drug-costs-american-patients) that prioritize lowest net drug cost within the benefit, TrumpRx is unlikely to materially change plan economics. In those cases, the underlying pricing strategy already focuses on minimizing net cost rather than maximizing rebates, limiting incremental impact.

Overall, TrumpRx is most likely to benefit uninsured or underinsured individuals and remains of limited relevance for most employer-sponsored health plans because it does not integrate with traditional insurance benefits.

## What Is the FTC Settlement With Express Scripts?

In February 2026, the Federal Trade Commission secured a landmark settlement with Express Scripts, the PBM within Evernorth and Cigna, resolving allegations that certain PBM practices contributed to inflated insulin prices and higher patient out-of-pocket costs.

According to the FTC, the [settlement](https://www.ftc.gov/news-events/news/press-releases/2026/02/ftc-secures-landmark-settlement-express-scripts-lower-drug-costs-american-patients) requires Express Scripts to implement a series of changes intended to improve transparency and better align pricing with patient costs. These changes include:

- Ending formulary practices that favor higher list-price drugs over lower net-cost alternatives
- Offering benefit designs where member cost sharing reflects net drug prices, rather than inflated list prices
- Expanding reporting and transparency to plan sponsors
- Reducing PBM compensation structures tied to rebates and list pricing
- Making direct-to-consumer pricing options, such as TrumpRx, available within standard offerings where legally permissible

The FTC estimates that these reforms could reduce patient out-of-pocket costs by billions of dollars over time, particularly for insulin and other high-utilization therapies.

While the settlement focuses heavily on insulin pricing, its broader significance lies in the precedent it sets for how PBM pricing practices may be evaluated across other drug classes over time.

This settlement also follows a [broader FTC investigation](https://www.fiercehealthcare.com/regulatory/ftc-evernorth-near-settlement-case-over-insulin-prices?utm_medium=email&utm_source=nl&utm_campaign=HC-NL-FierceHealthcareWeekly&oly_enc_id=9651D0871612H7D) into PBM practices across the industry. CVS Caremark and OptumRx, the other two largest PBMs, remain under regulatory scrutiny, and potential outcomes for those organizations are still to be determined.

This broader context helps explain why TrumpRx and the FTC settlement are often discussed together. TrumpRx surfaces cash prices outside the benefit, while the FTC settlement challenges how PBMs determine which prices and purchasing channels are recognized as in-network within employer-sponsored pharmacy benefits.

If regulators ultimately require PBMs to recognize certain direct-to-consumer prices within standard benefits, platforms like TrumpRx could move from a headline-driven cash option to something that meaningfully intersects with employer benefit design. That outcome is possible, but not guaranteed, and would unfold over time.

For this shift to materially affect employer pharmacy spend, several conditions would need to be met. Direct-to-consumer pricing would need to be recognized within insurance benefits, aligned with deductibles and out-of-pocket maximums, and incorporated into standard PBM or carrier contracting models. None of these changes are in place today, and any movement in this direction would likely require additional regulatory guidance and employer opt-in.

## What This Means for Employers Right Now

TrumpRx does not reduce plan costs, premiums, or overall employer pharmacy spend today. For many insured employees, existing plan pricing remains less expensive than TrumpRx cash pricing, particularly where generics and preferred formulary options are available.

Employers should consider not only whether an individual price appears lower, but how off-benefit purchasing affects claims visibility, care coordination, and overall pharmacy trend analysis.

For employers already using transparent PBM models that prioritize lowest net cost, TrumpRx is unlikely to change plan economics today, reinforcing that its primary value is visibility rather than benefit integration.

The FTC and Express Scripts settlement, while more technical, is potentially more consequential for employers. It signals increased regulatory scrutiny of PBM pricing practices that directly affect formularies, rebate economics, transparency, and how member cost sharing is calculated.

The relevance of these developments may also vary by funding arrangement, with self-funded employers generally having more flexibility to evaluate future benefit design changes than fully insured employers, where carrier adoption and regulatory approval play a larger role.

Employers should view these developments as a moment for awareness and preparation, not immediate benefit redesign.

## What Employers Should Do Now

Employers do not need to overhaul pharmacy benefits in response to these headlines. However, there are practical steps that can help protect plan value and avoid confusion:

### Set clear expectations internally and with employees.

Communicate that TrumpRx is a cash-pay pricing option outside the benefit and does not automatically lower premiums or employer costs.

### Ask targeted questions of PBM partners

During renewals or performance reviews, ask how formularies account for lower net-cost alternatives, whether member cost sharing reflects net pricing, and how transparency commitments align with evolving regulatory expectations.

### Identify limited cases where off-benefit pricing may help, while evaluating potential tradeoffs in claims visibility and care coordination

Certain populations with high out-of-pocket specialty drug costs may benefit from cash pricing options. These cases should be evaluated deliberately and in coordination with advisors.

### Prepare for potential future integration without assuming it

If direct-to-consumer pricing becomes recognized within in-network benefits, employers will need to understand how those prices interact with deductibles, out-of-pocket maximums, and total plan costs.

## Bottom Line

TrumpRx is a highly visible direct-to-consumer pricing initiative that does not currently integrate with employer-sponsored benefits and has limited immediate impact on overall plan economics.

The FTC and Express Scripts settlement represents a more structural shift. It signals potential changes in how PBM pricing practices, network recognition, and benefit design may evolve over time.

This is not an endorsement of any specific policy or platform. It is an assessment of how emerging regulatory and pricing dynamics could influence employer pharmacy strategy.

For employers, the priority is not reacting to headline pricing, but understanding how pricing sits inside or outside the benefit structure and ensuring pharmacy programs remain aligned with cost discipline, access, and long-term sustainability as the landscape evolves.

\]\]>How Founders Can Move Beyond Equity to Win and Keep Talenthttps://www.sequoia.com/2026/02/benefits-to-win-and-keep-talent/

Fri, 20 Feb 2026 17:07:34 +0000https://www.sequoia.com/?p=63074Learn why equity alone no longer motivates employees and how modern benefits and total rewards help founders attract, retain, and support top talent.

The post [How Founders Can Move Beyond Equity to Win and Keep Talent](/content/2026/02/benefits-to-win-and-keep-talent/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

For decades, founders relied on equity to attract and retain their employees. The promise of a potentially life-changing payout created motivation and loyalty. But today, exit timelines are longer, [liquidity is less predictable](/content/2025/09/founder-exit-strategy/index.html), and employees increasingly prioritize what they need in the present, not just the future.

How can founders compete for talent when [long-term upside](/content/2026/01/equity-trends-2026-long-term-incentives/index.html) isn’t enough, or isn’t guaranteed?

Relying more on short-term incentives and compensation adjustments is part of the solution, as highlighted in Sequoia’s [2026 Compensation and Equity Trends Report](/content/reports/2026-comp-equity-trends/index.html). But if you want to build a durable team, don’t underestimate the strategic and powerful role of benefits and total rewards.

“Health care, retirement, and wellbeing perks are becoming increasingly crucial at earlier and earlier stages,” said Sequoia Business Consultant Cris Cafiero.

He cited two reasons for this trend. Psychologically, benefits signal a company’s values and culture to current and future talent. And economically, subsidizing healthcare often costs less than giving away ownership or increasing cash compensation.

In other words, benefits influence both culture and the bottom line.

Want to design a benefits offering that wins on all fronts? Here’s what you need to know.

## Going Beyond Core Benefits Sets Employers Apart

In the US, [86% of private-sector employees](https://www.census.gov/library/stories/2024/02/health-care-costs.html) are offered employer-sponsored health insurance. That means core benefits — medical, dental, vision, life insurance, disability coverage, retirement plans, and access to an Employee Assistance Program (EAP) — are table stakes.

If your offering stops at the baseline of benefits, you’ll miss an opportunity. Employees increasingly expect benefits that support the whole person and what they value.

According to the American Psychological Association’s (APA), [Work in America Survey](https://www.apa.org/pubs/reports/work-in-america/2023-workplace-health-well-being):

- 92% of workers say it’s important to them to work for an organization that values their emotional and psychological wellbeing.
- 92% say it’s important to them to work for an organization that provides support for employee mental health.

These expectations show up in employee satisfaction, retention, and ultimately, whether people stay or leave.

When benefits feel modern and relevant, employee satisfaction jumps to 91% and retention to 90%, according to [Prudential’s Benefits & Beyond 2025 study](https://www.prudential.com/employers/group-insurance/industry-insights/benefits-and-beyond). But that study also found that while 86 percent of employers say their benefits are modern, only 59 percent of employees agree. When benefits don’t feel relevant, satisfaction drops to 68 percent and [retention falls to 73 percent](https://www.newsweek.com/prudential-group-insurance-president-workforce-risk-employers-cant-afford-ignore-opinion-2078234).

## Examples of Modern Benefits

When it comes to benefits, modern doesn’t necessarily equal expensive. Focus on options that are thoughtful, aligned to your company’s mission, and relevant to your workforce.

“Employees want to work for a company that cares about its people,” said Sequoia Director of [Wellbeing](/content/reports/2026-wellbeing-trends/index.html) Shannon Arens. “Even if they don’t personally need a certain benefit, the fact that it’s offered and communicated signals that this employer is focused on building a culture of care. And that feels good when someone is deciding to join or stay at a company.”

Here are a few modern benefits that bring that philosophy to life:

**Health plan flexibility**

- Multiple health plan options, including a high-deductible plan paired with an HSA or FSA to give employees choice and tax efficiency.

**Physical wellbeing**

- Gym access discounts and reimbursement
- Fitness apps
- Access to a concierge primary care experience

**Mental health**

- Mental health and mindfulness apps
- Access to therapists and behavioral health coaches
- Paid sabbaticals for long-tenured employees

**Financial**

- Personal finance education
- Student loan repayment assistance

**Targeted stipends**

- Remote work expenses
- Commuter expenses
- Childcare

**Growth and long-term development**

- Tuition reimbursement
- Learning and development stipends for skills, certifications, or leadership training.
- Career mobility and internal growth programs.

**Work-life balance**

- Unlimited or flexible PTO
- Paid volunteer time
- Flexibility in where work gets done

**Family and caregiving support**

- Childcare or elder care assistance
- Expanded leave policies aligned with family needs
- Pet care

## Building Sustainable and Thoughtful Benefits: Where Founders Should Start

Building a strong benefits strategy begins with clarity. The following four options will shed light on where to best spend your budget.

### Benchmark intelligently

Benefits benchmarking provides a practical baseline for staying competitive while managing costs. By helping you understand how your benefits compare to similar companies, you can avoid both underinvesting and overspending.

( [Participate in Sequoia’s 2026 Benefits Benchmarking Survey](https://sequoiaconsulting.qualtrics.com/jfe/form/SV_29LyWdGgCp4t9aK) to get exclusive access to the benchmarking report, built on data from more than 2,000 companies and covering healthcare, wellbeing, leave, and retirement benefits.)

### Understand your workforce

Needs change across life stages, and a thoughtful benefits strategy starts with knowing who your employees are and what they value and prioritize. For example, early-career teams often value growth, flexibility, and learning. More family-oriented populations prioritize healthcare, leave, and caregiving support.

### Reflect culture through your choices

Benefits inevitably signal what your company values. Be intentional but prioritize what matters most to your workforce. Alignment is strongest when culture and employee priorities reinforce each other.

### Ask employees directly

Use surveys and structured feedback to identify valued benefits, underused offerings, and gaps between perceived value and real impact.

## Cost-Smart Strategies Founders Often Overlook

It’s possible to offer stronger benefits while still maintaining cost control. Here are strategies to manage spend:

### Partner with a PEO to level the playing field

Early-stage companies often face limited options in the small-group market. Fewer plans, less flexibility, and minimal negotiating power can constrain both quality and cost. Once a company reaches large-group scale (typically 100+ employees), plan quality and negotiating power improve significantly.

A professional employer organization ( [PEO](https://one.sequoia.com/)) pools companies together, allowing startups to access large-group benefits earlier. This can:

- Improve plan quality
- Expand options
- Increase cost efficiency

“Partnering with a PEO can be a great equalizer for small companies competing against larger firms,” Cafiero said. “It makes it a lot easier for talent to say yes to you.”

### Balance generosity with sustainability

Step away from benefits for a moment and imagine an all-you-can-eat buffet. The temptation to load your plate with food you won’t actually eat — just because you can — can be hard to resist. Founders often fall into a similar trap when they offer overly rich benefits without clear guardrails.

“A common mistake founders make is offering the richest, most expensive plan at 100% coverage,” said Cafiero. “The intention is good, but the outcome can be unsustainable. When employees don’t understand benefit tradeoffs, they often choose the most expensive plan simply because it’s free.”

This leads to overinsurance and rising employer costs, a problem that only grows as the company scales. Simply cutting the benefit isn’t a clean fix. Once a benefit is introduced, it quickly becomes an expectation and reversing it can damage morale. Pulling back later is far harder — culturally and emotionally — than improving benefits thoughtfully over time.

## Benefits Shape the Company You’re Building

Even when employees aren’t actively using every benefit, thoughtful offerings show how a company thinks, supports its people, and plans to grow.

Benefits create confidence — in the present and in the future — for both employees and the company.

The companies that stand out in the talent market aren’t simply the ones offering more pay or equity, but the ones that craft total rewards with care and intention.

## See Where Your Benefits Truly Stand

If you want to understand how your benefits stack up against the market, sign up for a [complimentary benchmarking consultation](/content/lp/employee-benefits-benchmarking/index.html) with a Sequoia advisor.

\]\]>Designing Smarter Benefits Strategies with Contribution Modelinghttps://www.sequoia.com/2026/02/designing-smarter-benefits-strategies-with-contribution-modeling/

Thu, 19 Feb 2026 05:39:00 +0000https://www.sequoia.com/?p=57285Learn how contribution modeling with Sequoia aligns your cost-sharing strategy with company values, improves retention, and streamlines renewal planning.

The post [Designing Smarter Benefits Strategies with Contribution Modeling](/content/2026/02/designing-smarter-benefits-strategies-with-contribution-modeling/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

How you share the cost of benefits with your team isn’t just a budgeting decision — it’s a reflection of your company’s values. When done well, contribution strategies can build trust, support retention, and help your business stay competitive. But getting contributions right isn’t easy.

HR and finance leaders are often navigating competing priorities like controlling costs, staying compliant, supporting employee needs, and meeting leadership expectations. Contribution decisions affect everything from budget forecasts to employee morale, and they’re often made under tight timelines with limited visibility.

## Why Contribution Strategy Matters

Employees notice when their share of benefit costs changes. These decisions shape how your benefits are perceived and whether employees feel supported. A well-designed contribution strategy can improve enrollment, satisfaction, and retention, while helping your company manage spend and stay aligned with market benchmarks.

Many teams still rely on spreadsheets to model contributions. Even when tied to a broader strategy, working between spreadsheets and slide decks is time-consuming, difficult to maintain, and hard to collaborate on — especially when things change. If you decide mid-renewal to hire 10 new roles or adjust plan offerings, that often means another round of revisions, recalculations, and email threads.

We’ve seen this firsthand, supporting clients through exactly these kinds of pivots. It’s one of the reasons we built Sequoia OS: to bring compensation and benefits planning into one integrated platform, where data is connected and decisions are made with clarity.

## Built on a Trusted Process

Contribution modeling isn’t new to Sequoia clients. For years, our advisors have helped HR and finance leaders evaluate cost-sharing strategies during renewal season. What’s new is how we’re starting to deliver that experience — directly in-platform, with real-time data and guided workflows.

Your Sequoia team will continue to lead the process: gathering carrier quotes, marketing your plans, and preparing a strategic recommendation. Once your renewal strategy is ready, the Contribution Model helps you visualize tradeoffs, compare options, and finalize your approach with clarity.

## **What’s Ahead** – Sequoia One Spring 2026

We’ve already rolled out the Contribution Model to a pilot group of self-funded clients in 2025, and we’re looking forward to bringing it to Sequoia One groups as part of the benefits renewal process this spring.

If you’re preparing for renewal, now’s a great time to connect with your Sequoia advisor and explore how this new capability can support your strategy. If you’re new to Sequoia and considering a more strategic approach to benefits, our expert team is here to help—start a conversation [here](/content/form/consultation/index.html).

\]\]>2026 Federal Poverty Level Announced: Impact on ACA Affordabilityhttps://www.sequoia.com/2026/02/2026-federal-poverty-level-announced-impact-on-aca-affordability/

Tue, 17 Feb 2026 19:08:18 +0000https://www.sequoia.com/?p=63027Recently, the 2026 federal poverty level (FPL) was announced as $15,960 (up from $15,650 in 2025). Changes to the annual FPL will impact Affordable Care Act (ACA) affordability calculations for employers using the FPL safe harbor, described in more detail below.

The post [2026 Federal Poverty Level Announced: Impact on ACA Affordability](/content/2026/02/2026-federal-poverty-level-announced-impact-on-aca-affordability/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Recently, the 2026 federal poverty level (FPL) was [announced](https://www.govinfo.gov/content/pkg/FR-2026-01-15/pdf/2026-00755.pdf) as $15,960 (up from $15,650 in 2025). Changes to the annual FPL will impact Affordable Care Act (ACA) affordability calculations for employers using the FPL safe harbor, described in more detail below.

**Background**

Under the ACA, applicable large employers (ALEs) – employers averaging 50 or more full time and full time equivalent employees in the prior year – must offer affordable, minimum value coverage to full time employees and their dependents to avoid potential penalties. For 2026 plan years, ALEs must offer **at least one plan** that costs employees less than 9.96% of their household income (see our earlier post, _[2026 ACA Affordability Rate Increases to 9.96%](/content/2025/07/2026-aca-affordability-rate-increases-to-9-96/index.html)_). Because employers rarely know household income, ALEs can instead determine compliance using one of the three safe harbors: Federal Poverty Level (FPL), W 2, or Rate of Pay.

For more on the affordability safe harbors, see the [IRS Q&A on Affordability](https://www.irs.gov/affordable-care-act/employers/questions-and-answers-on-employer-shared-responsibility-provisions-under-the-affordable-care-act#Affordability).

**FPL Affordability Safe Harbor & Non-Calendar Year Plans**

Under the FPL safe harbor, coverage will be affordable if the cost to employees for self-only coverage on the lowest-cost plan offered is less than 9.96% of the FPL (which is determined annually). The FPL safe harbor amount is calculated based on the following formula:

Monthly Safe Harbor Amount = \[9.96% x Federal Poverty Level (FPL)\] / 12

Example: 9.96% x $15,960 (2026 FPL) = $1,589.61

$1,589.61/12 = $132.46 (monthly amount)

Importantly, employers may use the federal poverty guidelines in effect six months before the start of the plan year when applying the FPL safe harbor. Because the updated federal poverty guidelines are typically released after the calendar year has already begun, calendar year plans generally rely on the prior year’s figures. This approach gives employers enough lead time to set premium rates ahead of open enrollment. Below is an example of how a calendar year plan would calculate affordability using the 2025 FPL.

Example: 9.96% x $15,650 ( **2025** FPL) = $1,558.74

$1,558.74/12 = $129.89 (monthly amount)

As a result, the FPL safe harbor is calculated differently for calendar year plans than for non-calendar year plans:

- Employers with plan years beginning **January 2026** will meet the FPL safe harbor if they offer their full-time employees at least one plan that does not exceed $129.89 ($162.26 for Alaska & $149.31 for Hawaii) for self-only coverage.
- Employers with plan years beginning **February through June 2026** _have the option_ of using either the 2025 or 2026 FPL to calculate the FPL safe harbor (and should set contributions accordingly). Practically speaking, non-calendar year plans benefit from using the higher 2026 FPL amount for the 2026 plan year.
- Employers with plan years beginning **July through December 2026** will meet the FPL safe harbor if they offer their full-time employees at least one plan that does not exceed $132.46 ($165.58 for Alaska & $152.38 for Hawaii) for self-only coverage.

While the 2025 FPL can be used to determine the FPL safe harbor for plan years that begin before July 1, 2026, the 2026 FPL **must** be used for plans that begin on or after July 1, 2026.

_Note that Rate of Pay and W-2 safe harbors are calculated the same regardless of plan year start._

**Employer Takeaway**

With the flexibility to use the FPL in place six months prior to the start of the plan year, the FPL safe harbor amount will depend on plan year start, as described above. As such, ALE employers who rely on the FPL safe harbor to meet the ACA affordability requirements should keep this in mind when developing their plan contribution strategy.

**Note for Sequoia One Clients**: The Sequoia One plan year begins on July 1, 2026; therefore, Sequoia One clients who are ALEs can comply with the ACA affordability requirements under the FPL safe harbor by offering at least one plan that does not exceed $132.46 ($165.58 for Alaska & $152.38 for Hawaii) for self-only coverage. ACA affordability will be discussed with clients when setting annual contribution strategy.

**Additional Resources**

- [Annual Update of the HHS Poverty Guidelines](https://www.govinfo.gov/content/pkg/FR-2026-01-15/pdf/2026-00755.pdf)
- [HHS Federal Poverty Level](https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines)
- Sequoia Foreword: _[2026 ACA Affordability Rate Increases to 9.96%](/content/2025/07/2026-aca-affordability-rate-increases-to-9-96/index.html)_

[Connect with a Sequoia consultant](/content/form/consultation/index.html) to learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions. And if you’re already a Sequoia client, stay on top of your employer obligations with [your Compliance Checklist](https://admin.sequoia.com/connect) that highlights important compliance dates, action items, and resources.•

_This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2026 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved_

\]\]>New Laws Will Require New York City Employer Pay Data Reportinghttps://www.sequoia.com/2026/02/new-laws-will-require-new-york-city-employer-pay-data-reporting/

Tue, 17 Feb 2026 14:48:51 +0000https://www.sequoia.com/?p=63023New York City enacted two new pay data reporting laws, Int. 982-A and Int. 984-A, that will require employers that have 200 or more employees working in NYC to submit annual reports that will include pay data by race, ethnicity, and sex.

The post [New Laws Will Require New York City Employer Pay Data Reporting](/content/2026/02/new-laws-will-require-new-york-city-employer-pay-data-reporting/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

New York City enacted two new pay data reporting laws, [Int. 982-A](https://legistar.council.nyc.gov/LegislationDetail.aspx?ID=6788483&GUID=CDAAC0E3-EEC3-4CBA-8467-476D863BB303&Options=ID%7cText%7c&Search=pay+reporting) and [Int. 984-A](https://legistar.council.nyc.gov/LegislationDetail.aspx?ID=6788474&GUID=4100A3E1-33A0-4CC7-B431-E27984179902), that will require employers that have **200 or more employees working in NYC** to submit annual reports that will include pay data by race, ethnicity, and sex.

**Who Are Covered Employers?**

Private employers with 200 or more employees working in NYC are required to report. All employees performing work for compensation, including remote workers, should be counted and included for reporting purposes. Employer size should be determined by counting the highest total number of employees at any point during the reporting year.

**What Are the Reporting Requirements?**

Employers will be required to submit compensation information, categorized by race/ethnicity and gender, including:

- Compensation bands
  - “Employers will use Box 1- Wages, tips, other compensation” of the Form W-2 to measure pay for reporting purposes.
  - Employers may not use gross annual earnings.
- Hours worked
  - The hours-worked data that employers will use is based off the same hours-worked that employers record for the Fair Labor Standards Act (FLSA). FLSA hours worked do not include paid leave, such as sick and safe leave, paid time off, vacation leave or paid holidays.
  - Employers have the option to report employees exempt from the FLSA, by designating proxy hours of 40 or 20 hours per week for each week the employee worked that year, or to report actual hours worked if the employer already maintains records of actual hours worked for employees.

The laws do provide the City the right to change the information requested in the reporting, including reporting options for different gender identities not currently recognized by EEO-1 reporting requirements.

In addition to reporting, employers will be required to separately submit a signed statement confirming the submission of the pay report and the accuracy of its information.

**When Will Reporting Begin?**

The law requires that an **agency be designated by December 4, 2026**, one year after the law is effective. The designated agency will have one year to develop a standardized fillable form for covered employers to submit pay reports anonymously. Employers will be required to submit pay reports to the agency using this form sometime in 2027 and going forward on an annual basis.

**What Are the Penalties for Noncompliance?**

The designated agency shall publish annually on its website a list of covered employers that are not in compliance because they have not submitted a signed statement confirming the submission of a pay report and its accuracy via the anonymous method developed by the agency.

Violations of the law will subject employers to civil penalties, as follows:

- First offense: A covered employer will be subject to a written warning if the employer provides, within 30 days of the service of the summons, documentation indicating that such violation has been cured. If the employer fails to provide such documentation, they will be subject to a civil penalty of $1,000; and
- For any subsequent offense, a covered employer will be subject to a civil penalty of $5,000.

**What Is the Purpose of These Laws?**

Within one year after covered employers submit their pay reports, and annually thereafter, the designated agency will conduct a pay equity study and publish data contained in the reports in the aggregate, and in a manner that does not reveal covered employers’ or employee’s identifying information.

**Covered Employer Next Steps**

Employers who currently have employees or plan to hire employers in NYC and are close to the 200 employee threshold should review their pay practices, as this is an ideal time to ensure adherence to federal Equal Pay Act and [New York’s Pay Equity Law](https://dol.ny.gov/system/files/documents/2021/03/fact-sheet_-guidance-on-pay-equity-for-employers-in-new-york-state.pdf).

Sequoia One will continue to monitor and communicate any developments that will require employer action items as this legislation continues to be implemented.

\]\]>The 3 Most Common Severance Questions Companies Ask, Answeredhttps://www.sequoia.com/2026/02/severance-plan-data-2026/

Fri, 13 Feb 2026 18:04:02 +0000https://www.sequoia.com/?p=62949Sequoia’s latest data reveals how companies are structuring severance in 2026—from payout methods to equity treatment.

The post [The 3 Most Common Severance Questions Companies Ask, Answered](/content/2026/02/severance-plan-data-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

With layoff rates staying higher than anyone would like these last few years, one of the things I’m often asked about is how companies are structuring severance. Based on how 2026 started, with January marking [the worst month for US job cuts](https://www.forbes.com/sites/mikestunson/2026/02/05/us-jobs-disappear-at-fastest-january-pace-since-great-recession/) since 2009, it’s clear those conversations aren’t slowing down anytime soon.

As companies work through continued uncertainty — and with elevated layoffs keeping job security top of mind for executives — finance, HR, and executive teams are taking a closer look at their severance practices, including what’s standard, what’s changing, and how their approach compares to the broader market.

Before getting into the most common questions I hear, it’s useful to level-set what a typical severance policy includes today. That context helps explain why certain elements, like payment method or equity treatment, show up so frequently in leader conversations.

## What a Typical Severance Policy Covers

While there’s no single standard, most severance policies include a familiar set of components.

Organizations usually distinguish between termination types — separating reductions in force or role eliminations from performance-based or cause‑based exits. Cash severance is often formula‑driven, tied to base salary with adjustments for tenure or level.

Benefits play a role as well. Many companies offer COBRA support or a premium stipend, continued access to EAP services, or outplacement assistance. Equity treatment is another high‑interest area for employees, especially when it comes to vesting cutoffs and post‑termination exercise windows. Bonus and commission handling, whether prorated or excluded, tends to follow the underlying incentive plan.

Legal teams also stay heavily involved. Mutual releases, confidentiality provisions, non‑disparagement language, OWBPA disclosures, and timing rules under Section 409A all influence how severance is structured and delivered. And for larger workforce changes, having clear communications, manager scripts, and templates can dramatically shape the employee experience.

With that baseline in mind, here are the areas leaders ask about most often and what the latest Sequoia data shows about how practices are adapting this year.

## Are More Companies Adopting Formal Severance Policies?

The number of companies adopting formal severance policies is growing steadily. Across all company sizes, we’ve seen severance policy adoption increase year over year, from 53% in 2023 to 59% in 2026.

More organizations are formalizing their approach for the same reasons — predictability, fair treatment, and clearer budget planning. In a period where layoffs continue to ripple across industries, having a defined framework reduces uncertainty for both leaders and employees.

It also supports talent attraction. Candidates evaluating a new role want to understand how a company handles a termination or reduction in force. A transparent, consistent severance policy can make joining a company feel less risky and signal that the organization takes care of people even during tough moments.

## How Are Companies Paying Out Severance in 2026?

Lump sum continues to be the prevailing method across roles.

For managers and professional employees, 81% of severance arrangements use a lump‑sum payout. [Executives](/content/2025/06/executive-severance-package/index.html) are slightly less likely to receive a lump sum (74%), but more likely to receive salary continuation (14%) compared to other roles.

From a company perspective, lump sums are operationally simple but hit budgets immediately. Salary continuation spreads costs over time but adds administrative work. Most organizations are choosing whichever aligns best with cash flow, systems, and workforce planning needs.

## How Long Do Employees Have to Exercise Equity After Termination?

[Equity](/content/2026/01/equity-trends-2026-long-term-incentives/index.html) is often one of the most confusing parts of the offboarding process for employees, largely because the rules change the moment employment ends. For employees with stock options, leaving a company starts a countdown. Once employment ends, vested options don’t stay open indefinitely. They must be exercised within a defined window or they expire. That timeline, known as the post‑termination exercise period, is something employees watch closely because it can materially affect what they’re able to keep.

Most companies (62%) continue to rely on a 90‑day exercise window. This is typically due to accounting implications and equity plan constraints.

Nearly a third (28%) offer a tenure‑based approach with longer windows for longer service. Only 10% extend beyond 90 days, even though employees often push for more time.

## How This Shapes the Year Ahead

Severance will continue to play an important role in workforce planning throughout 2026. Policies that once felt sufficient may no longer match what employees expect or what companies need as they balance cost management with a thoughtful employee experience.

As more organizations formalize their severance structures, revisit payout methods, and evaluate equity treatment, clarity helps everyone involved. Well‑defined severance practices that give departing employees a more predictable experience and offer leaders stability during difficult transitions.

## Get More Sequoia Insights and Data

Want to know more about how investor-backed companies are designing their compensation and benefits programs? [Access Sequoia’s latest data and benchmarking reports](/content/reports/index.html).

\]\]>EU Pay Transparency Directive Countdown: February 2026 Updatehttps://www.sequoia.com/2026/02/eu-pay-transparency-directive-updates-february-2026/

Thu, 12 Feb 2026 14:15:51 +0000https://www.sequoia.com/?p=62939A February 2026 update on how EU member states are implementing the Pay Transparency Directive and what employers should be preparing for next.

The post [EU Pay Transparency Directive Countdown: February 2026 Update](/content/2026/02/eu-pay-transparency-directive-updates-february-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

_As the June 2026 implementation deadline approaches, EU member states are continuing to release draft legislation that shapes how the EU Pay Transparency Directive will apply in practice. Each month, we’ll share an update highlighting key developments and what they mean for employers._

The EU Gender Pay Transparency Directive requires all 27 EU countries to transpose pay transparency legislation into national law by June 2026, and introduces new obligations for employers operating in the region.

The Directive impacts all employers with employees in an EU country and introduces new requirements around pay transparency during recruitment, as well as pay disclosure obligations to current employees upon request. Employers with more than 100 employees in a single EU country will also be required to calculate and publish gender pay gap reports and take remedial action where pay gaps of over 5% are identified and cannot be justified using objective, non-gendered criteria.

[The EU Pay Transparency Directive](/content/2025/03/adapting-to-changing-acceptance-and-regulation-for-dei-globally/index.html) also takes a more holistic view on the definition of “pay,” adopting a broader definition of total rewards that encompasses both compensation and benefits.

## Recent Updates

We’re finally seeing more traction from member states, with draft legislation now released by 11 of the 27 EU countries.

While there was early hope for consistency across the member states, we’re already seeing some clear differences in the application of the Directive. This will make navigating the legislation even more challenging for employers who have employees in multiple EU countries.

**Poland and Germany**

For example, Poland’s draft legislation significantly shortens response timelines for pay information requests, requiring employers to respond within 30 days to employee requests and within just 14 days to unions or employee representatives. This compares with the two month timeframe set out in the Directive.

Poland’s draft law may bring some relief to benefits teams. It indicates that employers may exclude pay components that are equal in cash, such as allowances and benefits in kind provided equally to all employees — potentially simplifying data collection and reporting. Germany may also be looking to simplify by allowing employers to exclude low-value benefits in kind, such as subsidized canteen meals or travel discounts, from reporting requirements.

Poland’s draft legislation would also bring forward the pay gap reporting timelines. Reports would be due by March 31 each year, with no phased introduction based on company size. All companies with more than 100 employees would be required to submit their first report by March 31, 2027, which is more than two months earlier than the Directive requires for employers with more than 150 employees, and more than four years earlier than for those with 100–149 employees.

**Finland, Sweden, The Netherlands, Slovakia**

Finland and Sweden plan to adopt the Directive’s headcount thresholds for pay gap reporting but will also retain elements of their existing laws. In Finland, companies with more than 30 employees must continue to complete pay audits, while Sweden’s threshold remains 25 employees.

The Netherlands, Slovakia, and Sweden look to be closely aligning their local laws with the Directive. However, the Netherlands is pushing to delay implementation of its legislation to January 1, 2027 — six months later than the Directive’s deadline. This could set a precedent for other countries to delay their implementation. If so, it will be interesting to see whether the European Commission will allow it or force countries to comply with the given deadline or face penalties.

**Ireland and Malta**

Some countries, including Ireland and Malta, are allowing greater flexibility around pay disclosure in the recruitment process. Employers may be permitted to provide information on salary levels/ranges only before the interview or start of employment, rather than in the job posting. This differs from countries that are aligning closely with the Directive, where disclosure of salary levels/ranges may be required in the job posting.

## How Can You Prepare for the EU Pay Transparency Directive?

While we wait for draft legislation from the remaining 16 countries, and final legislation from all, employers should prepare now. We recommend focusing on the following four steps:

1. **Choose your data collection method**: Decide how you will collect data across compensation and benefits.
2. **Assess your data**: Review your total rewards and pay structures, benefits eligibility, and design, then calculate the pay gaps.
3. **Create an action plan**: Document how pay gaps will be explained, where remediation will be required, and how findings will be communicated.
4. **Report your findings**: Understand jurisdiction-specific legal requirements, build a compliant reporting process, implement supporting technology, and establish a framework for ongoing review.

## Get Expert Support

If you need support for preparing for the EU Pay Transparency Directive requirements, reach out to a [Sequoia Global Advisor](/content/form/consultation/index.html).

\]\]>What 2026 Medical Renewals Taught Us About the Staying Power of Wellbeing Programshttps://www.sequoia.com/2026/02/2026-medical-renewals-wellbeing-programs-insights/

Wed, 11 Feb 2026 19:34:02 +0000https://www.sequoia.com/?p=62923As medical costs rose in 2026, employers chose stability over cuts. Explore what renewal decisions reveal about the evolving role of wellbeing.

The post [What 2026 Medical Renewals Taught Us About the Staying Power of Wellbeing Programs](/content/2026/02/2026-medical-renewals-wellbeing-programs-insights/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

For many employers, the 2026 medical renewal season brought a familiar but unwelcome headline: costs were going up, and in many cases, often fast. More than three‑quarters of employers saw increases above 6%, and a significant share faced double‑digit jumps. In a year where budgets were tightening before the calendar even turned, the natural question became: What’s going to give?

But the answer wasn’t what most expected. Instead of scaling back, employers overwhelmingly chose to protect — and often expand — their wellbeing programs. Sequoia’s 2026 Wellbeing Trends Report reveals a quiet but meaningful shift in how organizations are thinking about wellbeing, especially when financial pressure is high.

Together, the trends point to a story of stability, sharper focus, and rising expectations.

## A Tough Renewal Year That Didn’t Trigger Cuts

There’s no question that renewals were difficult. The most common increases fell in the 6–10% range, with another large portion of employers experiencing 11–20% hikes. These kinds of jumps often prompt companies to revisit anything seen as discretionary.

Yet 68% of employers made no changes to their wellbeing programs — no cuts, reductions, or restructuring. Even more striking, 22% added new programs without eliminating anything, while only a very small minority (3%) chose to eliminate a program.

This level of stability in a challenging financial year signals that wellbeing has crossed an important threshold. Employers increasingly see it as integral to the employee experience and to long‑term cost management, rather than a perk that can be adjusted when times get tough.

## Stability Across Company Sizes

One of the most consistent themes in the data is how similar employer behavior was across company sizes. Small, midsize, and large organizations all leaned heavily toward maintaining their wellbeing programs. Notably, midsized employers (especially those with 501–1,000 employees) were among the most likely to add new offerings this year.

This trend held steady even when we looked specifically at employers with the highest medical increases. You might assume that companies facing double‑digit renewals would be the first to scale back. Yet “no change” was still the most common response, and “add‑only” decisions appeared across every renewal tier — even among those with the steepest cost jumps.

The takeaway: Employers believe cutting wellbeing hurts more than it helps. Whether because they’ve adjusted medical plan designs, are seeing greater employee need, or are taking a long-term view on managing chronic conditions and medical utilization, wellbeing support feels increasingly non‑negotiable.

## Sharper Priorities: What Employers Expect From Vendors Now

While employers largely kept their programs intact, they did become more specific in how they evaluated partners. Cost continues to matter. It was the top factor for 58% of employers selecting wellbeing vendors, but it’s no longer the only point of focus.

The second‑most important factor this year was demonstrated ROI or outcomes, selected by 22% of employers. Employers aren’t looking to reduce wellbeing programs, but they are demanding clearer evidence of value.

Vendors that can articulate measurable outcomes, integrate smoothly with other systems, and provide transparent reporting have an advantage. In a year where budgets are tight, the pressure isn’t to cut, it’s to prove impact.

## A More Strategic Lens: Targeting High‑Cost Conditions

Finally, the report shows that employers are getting more intentional with where they invest. Instead of spreading resources thinly, many are directing wellbeing budget toward areas fueling their medical costs: mental health utilization, obesity treatment demand, increased overall utilization, and chronic condition management.

This reflects a more strategic approach to wellbeing — one that aligns supportive programs with areas of highest medical spend. Rather than deprioritizing wellbeing during a tough renewal year, employers are using it as a tool to address the very cost drivers that influenced their budgets in the first place.

## What This Year’s Renewal Decisions Really Signal

It wasn’t an easy year for medical renewals, but the response from employers was clear and consistent: wellbeing programs aren’t going anywhere. Even under real cost constraints, companies chose continuity over contraction, refinement over reduction, and value over volume.

As wellbeing benefits continue to mature, their role is becoming more foundational as a core part of how employers support their people, protect their culture, and manage long‑term health trends.

## Get More Insights from the 2026 Wellbeing Trends Report

If you’d like to dig into more data, including insights related to GLP-1 coverage, mental health support, and AI in wellbeing programs, [join us for our webinar](/content/event/employer-approaches-to-wellbeing-in-2026/index.html), Employer Approaches to Wellbeing in 2026: GLP-1, Mental Health, Cost Containment, AI and More, on Thursday, March 5.

\]\]>Understanding AI Risk Before It Becomes Exposurehttps://www.sequoia.com/2026/02/ai-risk-business-liability-insurance/

Fri, 06 Feb 2026 21:02:25 +0000https://www.sequoia.com/?p=62830 AI adoption is creating new liability risks. See how AI exposure affects insurance, governance, and leadership accountability.

The post [Understanding AI Risk Before It Becomes Exposure](/content/2026/02/ai-risk-business-liability-insurance/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Artificial intelligence is becoming embedded across business operations and informing decisions, workflows, and customer experiences. And it’s often happening faster than oversight can keep pace. As a result, legal and financial exposure is beginning to surface in ways leadership teams didn’t anticipate.

Recent legal developments and insurer attention are converting AI mistakes into real claims and coverage questions. For example, courts have begun allowing [discrimination claims](https://www.forbes.com/sites/sheilacallaham/2026/01/13/applied-for-a-job-through-workday-court-authorized-opt-in-is-now-open/) to proceed where plaintiffs allege automated hiring tools produced biased outcomes. In another case, an airline was [required to honor incorrect information](https://www.bbc.com/travel/article/20240222-air-canada-chatbot-misinformation-what-travellers-should-know) generated by its chatbot.

These examples don’t suggest organizations should avoid AI. Instead, they remind us that companies remain accountable for how automated systems influence decisions affecting people, customers, and operations. At the same time, insurers and regulators are paying closer attention to how organizations govern AI use.

Many companies assume AI exposure fits neatly within existing [cyber coverage](/content/2025/09/cyber-liability-risk/index.html). In practice, AI introduces forms of risk that extend beyond traditional data breach scenarios.

## Where AI Is Creating Exposure

AI risk rarely sits in one function. It spreads across people, technology, operations, and governance. In many organizations, usage spreads across teams before leadership has full visibility into where exposure is forming. Common areas include:

**Employment and hiring decisions**

Recruiting and screening tools can unintentionally favor or exclude candidates. Bias in training data or model logic can trigger discrimination claims. This exposure often intersects with Employment Practices Liability (EPL).

**Data use and privacy**

AI systems often rely on large volumes of data, including sensitive or proprietary information. Improper use, leakage, or model training on restricted data can create privacy and regulatory exposure.

**Intellectual property risk**

Model outputs may incorporate protected or proprietary material, raising questions around ownership and infringement.

**Reliability and decision risk**

AI-generated outputs can be inaccurate or misleading. When those outputs influence customer decisions, financial outcomes, or product performance, liability may follow, often intersecting with Technology Errors & Omissions (E&O).

**Third-party dependency**

Many organizations rely on [external AI vendors](/content/2025/10/third-party-liability/index.html). Their failures, bias, outages, or data issues can become your liability.

## What Leaders Should Do Now

Managing AI risk starts with visibility and ownership. Organizations don’t need perfect governance to make meaningful progress, but they do need clarity on where exposure exists. Start here:

**Build visibility**

- Map where AI is currently used across the organization.
- Flag where automated outputs influence hiring, customer interaction, financial decisions, or product behavior.

**Establish governance and accountability**

- Assign clear ownership for AI oversight.
- Document baseline controls for data use, model review, and approval for higher-impact applications.

**Address employment and bias exposure**

- Pressure test recruiting and screening tools for bias.
- Clarify how algorithms evaluate candidates and which data they rely on.
- Recognize that biased automated decisions can drive Employment Practices Liability (EPL) claims.

**Evaluate third-party risk**

- Require vendor transparency, control attestations, and contractual protections.
- Confirm where accountability for AI-driven outcomes remains with your organization.

**Align insurance and risk strategy**

- Review how existing policies respond across Technology E&O, EPL, Cyber and Privacy, and D&O.
- Identify exclusions, ambiguity, or emerging gaps.

These steps improve visibility and help organizations understand exposure before it becomes a claim, regulatory issue, or operational disruption. They also signal to underwriters that the company understands and manages AI risk.

## Coverage Considerations

AI can create liabilities that traditional coverage wasn’t originally designed to address. As AI becomes more embedded in operations, leadership teams should understand how exposure may intersect with existing coverage, including:

- **EPL**, particularly for automated hiring and screening.
- **Technology E&O**, where AI-driven outputs shape customer decisions or business outcomes.
- **Cyber and Privacy**, where data use, leakage, or model training creates exposure.
- **Directors & Officers (D&O)**, where governance and oversight of AI become leadership-level concerns

Coverage outcomes often depend on how risk is disclosed, governed, and documented.

## Broker Checklist: AI Risk

Questions to ask your broker:

- Does my current cyber policy cover AI-related exposures, or are there exclusions?
- Are there AI-specific endorsements available for E&O or Tech Professional Liability?
- How do carriers define “algorithmic liability,” and what triggers coverage?
- Will regulatory fines related to AI compliance be covered under any policy?
- What documentation will underwriters expect at renewal if we deploy AI in critical workflows?
- Are insurers differentiating between proprietary AI models and third-party tools in underwriting?

## What AI Risk Means for Leadership

AI will remain part of how organizations operate and grow. The task for leadership is ensuring that the organization understands where it introduces risk.

Companies that build visibility, assign ownership, and align protection early are better positioned as they scale. Those that delay often learn through claims, regulatory attention, or investor concern. Remember, the goal isn’t to slow adoption. It’s to advance with clarity and fewer surprises.

## Understand Your AI Exposure Before It Becomes a Claim

If AI is already influencing decisions inside your organization, now is the time to understand how that exposure shows up in your [risk](/content/risk/index.html) profile. A review of governance, vendor dependencies, and insurance alignment can help surface gaps before they turn into claims or regulatory scrutiny. [A Sequoia advisor can help take a closer look](/content/form/consultation/index.html).

**More from Kristen Peed:**

- [Cyber Liability Risk in the Age of AI: Smarter Tools, Higher Stakes](/content/2025/09/cyber-liability-risk/index.html)
- [Risk Management Is a Story Worth Telling](/content/2025/08/risk-management-is-a-story-worth-telling/index.html)
- [Travel Risks: Why Employers’ Duty of Care Doesn’t Take Holidays](/content/2025/11/duty-of-care-risk-strategy/index.html)
- [Are You Really Covered? Why General Liability Isn’t Enough for Third-Party Risk](/content/2025/10/third-party-liability/index.html)
- [Risk Resolutions for 2026: Get Your Insurance Program in Shape](/content/2026/01/risk-management-resolutions/index.html)

\]\]>February Wellbeing Focus: Move Well and Live Well, Black History Month, and Addressing Current Eventshttps://www.sequoia.com/2026/02/february-2026-wellbeing-resources/

Thu, 05 Feb 2026 13:56:51 +0000https://www.sequoia.com/?p=62798Support employee wellbeing in February with Sequoia’s Move Well, Live Well resources, Black History Month guidance, and tools for addressing current events.

The post [February Wellbeing Focus: Move Well and Live Well, Black History Month, and Addressing Current Events](/content/2026/02/february-2026-wellbeing-resources/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

February offers employers a meaningful opportunity to support their employees’ wellbeing through proactive health initiatives and compassionate communication during challenging times. This month, Sequoia’s wellbeing theme, Move Well, Live Well, centers on helping employees build sustainable habits that boost energy, resilience, and overall quality of life — just in time for Heart Health Month.

## Spotlight: The Move Well, Live Well Theme

Movement is one of the most powerful tools for improving physical and mental wellbeing. This month’s Sequoia toolkit provides clients with resources to inspire healthy habits across the company:

- **The Importance of Movement & How to Get Started**, a guide with approachable ways to add more activity.
- **28-Day Move Well Challenge**, a plan that helps you move consistently in February one step at a time.
- **February 18 Live Webinar**: _Move Well, Live Well: Your Blueprint for Everyday Energy_, a session about helping you move more confidently and comfortably throughout your day. We’ll be joined by experts from our wellbeing partners, Hinge Health and Wellhub. Open to anyone. [Register here](/content/lp/wellbeing-events/index.html).

## Honor and Celebrate Black History Month

February is also Black History Month, a time to celebrate Black culture, contributions, and history while fostering inclusion and belonging. Sequoia’s supplemental guide includes educational content and suggested activities.

## Support Employees Impacted by Recent Events

Recent events in Minnesota and immigration enforcement actions will affect members of the workforce. Sequoia provides employer guides with communication templates, guidance on sharing benefits and resources, and referrals to mental health, legal, and community support services.

## Spotlight Available Benefits and Resources

February is a great time to remind employees of wellbeing tools available to them, such as mental health benefits, fitness perks, health coaching, and employee resource groups (ERGs).

Sequoia clients can access these tools by logging into Sequoia OS and going to the Wellbeing section.

**Related:**

- [Boost Benefits and Wellbeing Engagement with Sequoia’s 2026 Communication Resources](/content/2025/12/2026-wellbeing-communications/index.html)

\]\]>New California Law Requires Venture Capital Companies to Register and Report Beginning March 2026https://www.sequoia.com/2026/02/new-california-law-requires-venture-capital-companies-to-register-and-report-beginning-march-2026/

Mon, 02 Feb 2026 20:33:16 +0000https://www.sequoia.com/?p=62761New requirements under the California Fair Investment Practices by Venture Capital Companies Law (Law) requires venture capital (VC) companies with a “nexus to California” to complete new registration and reporting with the California Department of Financial Protection and Innovation (DFPI). The law is broadly written and has significant reach, even to companies that do not have a physical presence in California.

The post [New California Law Requires Venture Capital Companies to Register and Report Beginning March 2026](/content/2026/02/new-california-law-requires-venture-capital-companies-to-register-and-report-beginning-march-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

_**Updated 3/23/2026**: The California Department of Financial Protection and Innovation (DFPI) has announced that implementation and enforcement of the Fair Investment Practices by Venture Capital Companies Law (FIPVCC) is **suspended** until rulemaking is completed and final regulations are in place._

_As a result, covered entities are not required to:_

- _Submit new or updated FIPVCC registrations, or_
- _File FIPVCC-related reports by the April 1, 2026 deadline._

_These obligations will remain paused until the DFPI issues final regulations._

New requirements under the California [Fair Investment Practices by Venture Capital Companies Law](https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=CORP&division=2.5.&title=4.&part=&chapter=1.&article=&_gl=1*13fsl18*_gcl_au*MTQ0Mzk2Nzk5MS4xNzYzNTc4ODgy*_ga*MTg5NTUwNzg5OS4xNzU2MzMxNzU4*_ga_LDV6PXRQJZ*czE3Njk0NjU3ODMkbzEkZzAkdDE3Njk0NjU3ODMkajYwJGwwJGgw*_ga_6F5L768D2L*czE3Njk0NjU3ODMkbzEkZzAkdDE3Njk0NjU3ODMkajYwJGwwJGgw) (Law) requires venture capital (VC) companies with a “nexus to California” to complete new registration and reporting with the California Department of Financial Protection and Innovation (DFPI). The law is broadly written and has significant reach, even to companies that do not have a physical presence in California.

The **March 1, 2026** registration and **April 1, 2026** reporting deadlines are quickly approaching, despite the fact that DFPI has not yet launched a registration portal. VC companies should prepare by determining whether they are covered under the new law and, if covered, should send out the DFPI surveys that are needed for reporting.

**VC Companies Subject to the Law**

The Law applies to the following “covered entities:

- Venture capital companies, as defined under [California Corporations Code section 27500](https://dfpi.ca.gov/regulated-industries/vcc-reporting-program/who-should-report/);
- That are primary engaged in the business of investing in, or providing financing to, startup, early-stage, or emerging growth companies;
- That meets any of the following:
  - Are headquartered in California.
  - Have a significant presence or operational office in California.
  - Make venture capital investments in businesses that are located in, or have significant operations in, California.
  - Solicit or receive investments from a person who is a resident in California.

For more information on which companies are subject to reporting, see the [DFPI guidance](https://dfpi.ca.gov/regulated-industries/vcc-reporting-program/who-should-report/).

**Registration & Reporting Requirements**

1. **Registration**

Beginning **March 1, 2026**, covered entities must register with DFPI and provide their name, contact information, and a designated point of contact. Covered entities are required to submit any changes to this information when filing annual reporting (discussed below).

DFPI is developing a registration platform, which will be made available prior to March 1st. As of this writing, the platform is not yet available. Companies can check [this website](https://dfpi.ca.gov/regulated-industries/vcc-reporting-program/) for updates.

2\. **Collect Surveys & Report to the DFPI**

By **April 1, 2026**, and annually thereafter, covered entities must report anonymized data from the voluntarily completed surveys to the DFPI. The reports will be posted on the DFPI website.

**Provide & Collect Surveys:**

Covered entities must provide the [DFPI-developed survey](https://dfpi.ca.gov/wp-content/uploads/2026/01/VCC-Demographic-Data-Survey.pdf) to founding team members of each business the covered entity invested in during the prior calendar year. Along with the survey, a written disclosure must be provided stating the survey is voluntary, that no adverse action will be taken for not participating, and that aggregated data will be reported to DFPI.

Founding team members include:

- • Individuals who have been designated as the CEO or the President; and
- • Individuals who meet _**all**_ the following criteria:

- The individual owned initial shares or similar ownership interests of the business.
  - The individual contributed to the concept of, research for, development of, or work performed by the business before initial shares were issued.
  - The individual was not a passive investor in the business.

**Aggregated & Report Data:**

For the prior calendar year, covered entities will report:

- From the completed surveys, aggregated demographic data on gender identity, race, ethnicity, disability status, identification of LGBTQ+, veteran status, and California residence of founding team members of all businesses invested in during the prior calendar year.
- The percentage of venture capital investments made to businesses primarily founded by diverse founding team members.
- The percentage of the total amount of venture capital investments made to businesses primarily founded by diverse founding team members.
- The total amount in venture capital investments the covered entity invested in each business during the prior calendar year.
- The principal place of business of each company in which the covered entity made a venture capital investment.

DFPI is developing the reporting process, which will be made available prior to April 1, 2026. As of this writing, the reporting process is still in development. Companies can check [this website](https://dfpi.ca.gov/regulated-industries/vcc-reporting-program/) for updates.

**Penalties**

The DFPI has the power to investigate violations of the law and take action against covered entities that fail to meet their obligations or make an untrue statement in their reporting. Relief may include, but is not limited to, an order requiring the covered entity to refrain from the violation, costs for attorney fees and investigative expenses rendered, and monetary penalties (which can include $5,000 per day for which the violation or failure continues).

**Next Steps**

VC companies should first determine if they are a covered entity subject to the new California requirements.

Companies that are covered should:

- Provide the DFPI survey to the founding members of businesses it invested in during the prior calendar year.
- Monitor for updates to the registration portal and reporting process on the [DFPI website](https://dfpi.ca.gov/regulated-industries/vcc-reporting-program/).
- Prepare to register with DFPI by **March 1, 2026**, and complete reporting by **April 1, 2026**. _These deadlines no longer apply while implementation and enforcement is suspended until regulations are finalized._

**Resources:**

- [Fair Investment Practices by Venture Capital Companies Law](https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=CORP&division=2.5.&title=4.&part=&chapter=1.&article=&_gl=1*13fsl18*_gcl_au*MTQ0Mzk2Nzk5MS4xNzYzNTc4ODgy*_ga*MTg5NTUwNzg5OS4xNzU2MzMxNzU4*_ga_LDV6PXRQJZ*czE3Njk0NjU3ODMkbzEkZzAkdDE3Njk0NjU3ODMkajYwJGwwJGgw*_ga_6F5L768D2L*czE3Njk0NjU3ODMkbzEkZzAkdDE3Njk0NjU3ODMkajYwJGwwJGgw)
- [DFPI VCC Reporting Program Website](https://dfpi.ca.gov/regulated-industries/vcc-reporting-program/)
- [DPFI Who Must Register and Report](https://dfpi.ca.gov/regulated-industries/vcc-reporting-program/who-should-report/)
- [DFPI Survey](https://dfpi.ca.gov/wp-content/uploads/2026/01/VCC-Demographic-Data-Survey.pdf)

\]\]>AI Alone Won’t Help Companies Optimize People Spendhttps://www.sequoia.com/2026/01/ai-and-people-spend-optimization/

Thu, 29 Jan 2026 14:59:10 +0000https://www.sequoia.com/?p=62666AI only delivers value when companies have strong, organized people data. Learn why CFOs must build the right foundation to truly optimize people spend.

The post [AI Alone Won’t Help Companies Optimize People Spend](/content/2026/01/ai-and-people-spend-optimization/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

AI is driving a lot of conversations right now. But for finance and people teams, the more important story isn’t the AI itself, but what it finally makes possible in a part of the business that has historically been hard to manage with precision: people spend.

Marketing went through a similar evolution years ago. Before CRMs, it was difficult to measure the impact of marketing investments. Once technology made performance visible, the CMO’s role changed. Decisions became data-driven, accountability increased, and investment followed results.

The same transformation is now underway in how companies manage compensation and the overall investment they make in their people. AI is accelerating change, but technology adoption in the people space has lagged over the years. The data foundations and systems needed to make this technology useful weren’t in place. As those foundations come into place, a clear gap is emerging between organizations that can use this technology effectively and those that cannot.

For people‑first companies, employees represent the largest spend on the company income statement. Yet many organizations still struggle to answer foundational questions: What are we actually spending on people? Where is that spend going? And what return are we getting on the investment?

This isn’t a failure of intent. When companies make critical compensation decisions, they don’t rely on spreadsheets because they prefer them. They rely on them because, for a long time, spreadsheets were the only viable way to work with people data that was fragmented, inconsistent, and hard to trust.

Managing people spend this way is like driving while looking in the rearview mirror. You can see where you’ve been, but you have very little visibility into what’s ahead.

AI doesn’t fix that problem by itself.

AI only works when the foundation is right. To be effective, it requires two things: well‑organized data and models designed to answer the right questions. Without structured, connected employee data, AI doesn’t create insight. It simply accelerates confusion.

If companies want to truly drive employee-investment ROI, this is the work that matters. Organized people data means clear job architecture, consistent role definitions, reliable benchmarking, and systems that are connected and usable. Don’t mistake this for administrative cleanup. It’s the foundation for managing people spend with the same discipline applied to financial data.

Without that foundation, companies rarely realize the efficiencies AI promises. People teams remain overextended because their time is spent organizing and reconciling data rather than analyzing it. Decisions stay reactive, and compensation planning continues to rely on assumptions instead of outcomes.

Leading organizations are already operating differently. They’ve centralized their people data, aligned their systems, and are using technology and AI to analyze compensation and workforce dynamics in near real time. That allows them to move beyond benchmarking as the endpoint and focus instead on outcomes that matter the most, like retention of critical talent, offer-acceptance rates, productivity, and return on people investment.

Benchmarking still plays an important role, but it’s context, not the conclusion. What matters most is whether compensation decisions are driving the results the business needs.

This evolution is also changing who owns the conversation. People analytics has traditionally lived with the chief people officer and that shouldn’t change. But CFOs are increasingly stepping into this space because it aligns naturally with how they already think: ROI, accountability, and trade‑offs. Strategic advisors won’t be replaced by AI, but those who avoid data‑driven decision-making will fall behind.

We’re seeing a similar pattern across professional services. As AI absorbs routine analytical work, [firms are being forced to connect more directly to outcomes](https://www.wsj.com/tech/ai/ai-goodbye-to-billable-hours-cba198fe). Models built on historical assumptions are breaking down, replaced by a sharper focus on impact and value delivered.

The same is now true for compensation and people spend. Static spreadsheets and annual benchmarking cycles are giving way to real‑time analysis built on organized data. This isn’t a future state. It’s already happening.

The real risk for CFOs isn’t adopting AI too quickly. It’s assuming AI will fix problems rooted in how people data is structured and used. Companies that don’t modernize this foundation will continue managing people spend reactively, even as competitors move ahead with greater clarity and control.

The opportunity is significant. CFOs who can clearly see people spend, understand its drivers, and connect it directly to outcomes can manage their largest investment with far more precision. They can be proactive rather than reactive.

The question is simple: Are you set up to manage people spend for the business you’re running now, or are you still relying on tools built for a different era?

**More from Kyle Holm**:

- [The Founder Mindset Shift: Why M&A Is the New IPO](/content/2025/09/founder-exit-strategy/index.html)
- [Is Computer Science the New Liberal Arts Degree?](/content/2025/07/ai-and-engineering-jobs/index.html)

\]\]>Planning Headcount with Better Cost Visibility and Controlhttps://www.sequoia.com/2026/01/headcount-planning-cost-control/

Wed, 28 Jan 2026 19:29:33 +0000https://www.sequoia.com/?p=62623Discover how Sequoia OS Headcount Planning helps finance and people teams align, model scenarios, control people spend, and improve hiring accuracy.

The post [Planning Headcount with Better Cost Visibility and Control](/content/2026/01/headcount-planning-cost-control/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Headcount plans have a way of drifting off course soon after the board approves them. CFOs see this quickly because people spend is both significant and difficult to keep aligned with changing business conditions.

Hiring timelines, roles, and priorities change, turning many plans into static snapshots rather than a system that guides ongoing decisions. This creates decision friction across the organization. Leaders start questioning which numbers to trust. Recruiting and people teams refer to information that no longer matches current assumptions. And finance spends more time tracking how decisions have changed than providing the insights the business needs to move forward.

A more adaptive approach to headcount planning helps resolve these challenges. It keeps teams aligned as conditions change and brings the financial implications of each decision into focus, the moment they’re made.

Headcount Planning in Sequoia OS™ supports this continuous cycle. Plans adjust as timing, compensation, or role details change, and scenario planning gives finance and people leaders clarity into potential outcomes before changes affect the budget.

## A Connected Way for CFOs to Plan, Monitor, and Govern People Spend

Sequoia OS Headcount Planning connects headcount strategy to hiring execution, so finance, people, and recruiting teams plan together, model change, and keep hiring anchored to approved targets as the business evolves.

### Plan and model

- Build flexible, data-driven headcount plans that update as you change timing, compensation, or roles.
- Collect headcount requests, track approvals, create role plans with titles, levels, pay ranges, and hire dates. And lock approved plans so teams execute against the same goals.
- Preview the financial impact of changes by comparing scenarios to a baseline, so adjustments stay grounded in cost insight.

### Total cost insight

- Model cash, equity, benefits, and other costs with every change, so your plan reflects the full cost of the team you are building.
- See the cost behind every role and by org, team, or quarter, so it’s easier to protect runway and make tradeoffs with shared numbers.
- Track plan vs. actuals in real time so teams can course-correct before gaps snowball.

### Hire and execute

- Set your headcount plan as the compass for hiring, then manage every role against that plan as recruiting moves forward.
- Carry approved roles into hiring with ATS sync, open requisitions directly from the plan, and issue and track digital offers, so execution stays aligned with approved financial targets.
- Keep offers within range as they move through approvals, ensuring compensation decisions stay consistent and financially sound.

### Keep teams aligned on the same data

- Unify job definitions, pay ranges, benefits, and market benchmarks in one source of truth with real-time analytics, so leaders stay aligned and reporting stays board-ready.

## What’s New and What’s Coming in 2026

In December, we added upgrades to Headcount Planning that make it easier to run planning in the same cadence you run the business.

- **Cost views that match how you budget and report**: View headcount costs by month, quarter, or a custom date range. As assumptions change, the view recalculates dynamically, so it stays usable for forecasting and ongoing reviews.
- **Clearer visibility into open roles for recruiting stakeholders**: Open position visibility is now more role-aware. Talent partners see open positions assigned to them, while talent managers see their own positions plus those assigned to the talent partners who report to them.

Along with workflow and UX improvements, the focus in 2026 is making headcount processes more consistent and easier to govern without adding process overhead.

- **Approvals that extend beyond new position requests**: Today, workflows support approvals for new roles. In 2026, approvals will apply to additional actions, beginning with terminations, so teams can rely on one consistent approval pattern across more types of headcount changes.

## Bring More Predictability and Control to Your People Spend

Want to see how Sequoia OS helps finance leaders bring more discipline, accuracy, and visibility to people spend?

Explore [Headcount Planning](/content/total-comp-benefits/headcount-planning/index.html) or [connect with a Sequoia advisor](/content/form/consultation/index.html) for a deeper look at how it supports your planning and execution cycle.

\]\]>New York City Expands Safe and Sick Leave Requirementshttps://www.sequoia.com/2026/01/new-york-city-expands-safe-and-sick-leave-requirements/

Wed, 28 Jan 2026 17:55:35 +0000https://www.sequoia.com/?p=62582Starting February 22, 2026, new legislation enacted by the New York City Council expands New York City’s Safe and Sick Time Act (ESSTA). New amendments will broaden the covered reasons employees can take safe and sick leave, will require employers to provide 32 hours of unpaid safe and sick time to covered employees and formally incorporates the previously expanded 20 hours of employer-paid prenatal leave for eligible employees.

The post [New York City Expands Safe and Sick Leave Requirements](/content/2026/01/new-york-city-expands-safe-and-sick-leave-requirements/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

**Updated 3/16/2026**: The New York City Department of Consumer and Worker Protection (DCWP) issued updated FAQs and other guidance clarifying the new protections and requirements. At the same time, the NYC Mayor announced renewed enforcement efforts targeting employers that fail to comply with worker protection laws. This article has been updated to reflect the new guidance and enforcement efforts.

Starting **February 22, 2026**, new legislation enacted by the New York City Council expands New York City’s Safe and Sick Time Act (ESSTA). New amendments will broaden the covered reasons employees can take safe and sick leave, will require employers to provide 32 hours of unpaid safe and sick time to covered employees and formally incorporates the previously expanded 20 hours of employer-paid prenatal leave for eligible employees. The DCWP refers to the ESSTA as the “Protected Time Off Law” and uses the term protected time off instead of the previously used safe and sick leave/time, although the statute still uses safe and sick time.

**Current Law**

NYC ESSTA requires employers to provide employees who work in the City with paid or unpaid safe and sick leave. NYC provides [Frequently Asked Questions](https://www.nyc.gov/site/dca/about/paid-sick-leave-law.page) on the ESSTA website that explains the regulations in more detail.

Employers must comply with ESSTA regulations if an employee performs work, including remote work while the employee is physically located in New York City regardless of where the employer is located. Employees that work less than 80 hours in NYC within a calendar year are exempt from ESSTA benefits.

NYC’s Paid Safe and Sick Leave Law currently requires employers to:

- Provide employees with the latest written version of the [Notice of Employee Rights](https://www.nyc.gov/site/dca/about/Paid-Safe-Sick-Leave-Notice-of-Employee-Rights.page) to all current employees and post the Notice in the workplace in an area that is visible and accessible.
- Provide employees written protected time off policy that specifically explains the 32 hours of unpaid leave and the separate bank of 20 hours of paid prenatal leave while also including previous requirements under ESSTA.
- Allow employees to use safe and sick leave as it is accrued, with no waiting period for new hires.
- Only require documentation when employees use more than three workdays in a row of leave. Note that any documentation requirements must be explained in the employer’s written policy.
- Inform employees of their accrued, used, and total safe and sick leave balances on a paystub or through an employee-accessible electronic system. _Note that paid prenatal leave balances may be provided in separate documentation_.

**ESSTA Changes**

Starting February 22, 2026, employees will be able to use safe/sick leave for additional reasons, including:

- Closure of workplace, school or childcare center by order of a public official due to a public disaster (defined to include events such as a fire, terrorist attack, or severe weather conditions);
- Where a public official directs people to remain indoors or avoid travel during a public disaster;
- Where an employee or their covered family member has been the victim of workplace violence (defined as any act or threat of violence against an employee that occurs in a place of employment);
- Absences for employees acting as caregivers to provide care to a minor child or a care recipient (This includes for school holidays, day care closures and babysitter cancellations); and/or
- Absences for attending or preparing for legal proceedings related to subsistence benefits or housing, or taking actions necessary to apply for, maintain, or restore such benefits for themselves, a family member, or a care recipient.
- When both paid and unpaid protected time off is available, employers should apply paid time off to absences first unless the employee specifically requests unpaid time.
- If a former employee is rehired within six months, their previous unpaid protected time off balance must be reinstated along with their paid leave balance.

**_Supplementary Unpaid Leave_**

Starting on February 22, 2026, employers must provide all employees and new hires with an additional 32 hours of unpaid sick/safe time. Any unused, unpaid sick/safe time will not carry over into the following calendar year. Significantly, the unpaid leave would not be used until an employee has exhausted any accrued but unused paid sick/safe time. This leave is available immediately upon hire and at the start of each calendar year with no waiting period for use. The 32 hour bank of unpaid protected time off cannot be prorated for part-time employees hired mid-year.

Alternatively, employers can provide 32 hours of paid leave if the entire balance is immediately available for use upon hire and resets each calendar year.

**_Paid Prenatal Leave_**

The expansion of these regulations comes on the heels of the City’s amendment to ESSTA regulations that require employers to provide 20 hours of paid prenatal leave to eligible employees. This change now formally incorporates employer-paid prenatal leave into City law, whereas before, this leave only existed in City regulations and guidance. For more on NYC paid prenatal leave, see [our blog](/content/2025/06/nycs-new-paid-prenatal-leave-rules-what-employers-need-to-know/index.html). Updated guidance confirms that Paid Prenatal leave must be provided as a separate bank and cannot be satisfied by more generous sick leave or PTO policies.

**_Leave Increments_**

Employers may impose a minimum usage increment of up to four hours per day and must separately track and report both paid and unpaid time balances to comply with ESSTA’s notice and recordkeeping requirements. Note that Paid Prenatal leave allows a minimum usage of one-hour increments for eligible employees.

**Enforcement and Penalties**

The NYC Mayor’s office announced a new enforcement strategy and increased penalties for violations of ESSTA. Under the new strategy, the DCWP can request an employer to provide records that show their employees’ use of leave. The DCWP will then compare employees’ use of leave to national benchmarks of expected sick leave usage. If an employer records show unusually low use rates, the DCWP will treat this as strong evidence that protected time off is being restricted and may pursue enforcement on behalf of all affected employees. Common violations that may lead to low use rates include:

- failing to offer protected time off;
- insufficient written policies;
- unlawful restrictions on use; or
- absence control policies that discipline workers for last-minute callouts.

Employers that fail to offer compliant protected time off face potential damages of $500 per year for each affected employee, plus an equal amount in civil penalties. Subsequent violations may increase penalties to $1,000 per employee per year.

**Employer Action Items**

Employers in New York City or with employees in New York City should take the following steps to comply:

- Review and update safe/sick time policies to reflect the new requirements and provide written protected time off policy to employees within 14 days of implementation.
- Inform employees of their accrued, used, and total safe and sick leave balances on a paystub or through an employee-accessible electronic system. _Paid prenatal leave use and balance information may be provided in separate documentation_.
- Train HR personnel and managers involved in administering safe/sick leave to ensure they fully understand these changes.
- Provide all employees with the updated [Notice of Employee Rights](https://www.nyc.gov/site/dca/about/Paid-Safe-Sick-Leave-Notice-of-Employee-Rights.page) by 3/24/2026 and Sequoia One has included this notice in the onboarding workflow for new hires as of 3/1/2026.

**Sequoia One Client Support**

- Sequoia One will support clients with implementing the new 32-hour unpaid sick leave entitlements. Sequoia One also includes the Notice of Employee Rights in the new hire onboarding workflow.

**Additional Resources**

- [INT. No. 780-A](https://legistar.council.nyc.gov/View.ashx?M=F&ID=14824735&GUID=7456C40A-5434-4BAB-B293-03B639FB6BF6)
- [Protected Time Off Law](https://www.nyc.gov/site/dca/about/paid-sick-leave-law.page)
- [Rules for Protected Time Off Policies](https://www.jacksonlewis.com/sites/default/files/2026-02/NYC-Rules-for-Paid-Safe-And-Sick-Leave-Policies.pdf)
- [Protected Time Off Law: Notice of Employee Rights](https://www.nyc.gov/site/dca/about/Paid-Safe-Sick-Leave-Notice-of-Employee-Rights.page)
- [Protected Time Off Law: Frequently Asked Questions (FAQs)](https://www.nyc.gov/site/dca/about/paid-sick-leave-FAQs.page)

\]\]>Deadline Approaching for HIPAA Notice of Privacy Practices Updatehttps://www.sequoia.com/2026/01/deadline-approaching-for-hipaa-notice-of-privacy-practices-update/

Mon, 26 Jan 2026 16:13:17 +0000https://www.sequoia.com/?p=62536Under the Health Insurance Portability and Protections Act (HIPAA), all covered entities, including self-funded group health plans, must provide a Notice of Privacy Practices (NPP) explaining how they use, disclose, and safeguard protected health information (PHI) or electronic PHI (ePHI).

The post [Deadline Approaching for HIPAA Notice of Privacy Practices Update](/content/2026/01/deadline-approaching-for-hipaa-notice-of-privacy-practices-update/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

_Updated February 24, 2026: The Department of Health and Human Services (HHS) released [a revised Model Notice of Privacy Practices (NPP)](https://www.hhs.gov/hipaa/for-professionals/privacy/guidance/model-notices-privacy-practices/index.html). Regulated entities may use the HHS model notice to satisfy their HIPAA NPP obligation by entering their plan specific information._

Under the Health Insurance Portability and Accountability Act (HIPAA), all covered entities, including self-funded group health plans, must provide a Notice of Privacy Practices (NPP) explaining how they use, disclose, and safeguard protected health information (PHI) or electronic PHI (ePHI).

The [2024 HIPAA Final Rule](https://www.federalregister.gov/documents/2024/02/16/2024-02544/confidentiality-of-substance-use-disorder-sud-patient-records) issued by the U.S. Department of Health and Human Services modified privacy regulations relating to substance use disorder (SUD) treatment records under 42 CFR Part 2 (Part 2). The final rule modifications to Part 2 include aligning Part 2 Patient Notice requirements with the requirements of the HIPAA NPP.

Many HIPAA‑covered entities receive SUD‑related records from Part 2 programs in connection with treatment, payment, care coordination, or other health plan operations. As a result, these HIPAA‑covered entities must revise their NPPs, to include the required SUD-related updates by **February 16, 2026**.

**Which Employers Are Affected?**

This requirement applies to HIPAA-covered entities, including:

- Self-funded or level-funded group health plans, such as self-funded medical, dental, and vision plans, Health Reimbursement Arrangements (HRAs), and Flexible Spending Arrangements (FSAs); and
- Fully insured group health plans that have access to PHI or e-PHI.

Most employers that sponsor fully insured group health plans **do not** have this notice obligation, as they typically do not have access to PHI (they only have access to enrollment and summary health plan information). In these cases, the insurance carrier prepares and distributes the NPP. _Note that a fully insured group health plan will have an NPP obligation if it creates or receives PHI beyond summary health information or enrollment information._

**What Are the Distribution Requirements?**

The revised notice (or information about the material change and how to obtain the revised notice) must be distributed to plan participants **within 60 days** of those changes (so in this instance, 60 days from February 16, 2026). _Note that the Department of Health and Human Services (HHS) typically releases a model notice, though they have not yet issued one as of the date of this publication_.

Alternatively, if a health plan maintains a website that contains information about its customer services or benefits, then it must **prominently post its revised NPP on its website by the effective date** of the material change, making the notice available electronically through the website, and then provide a hard copy of the revised notice (or information about the material change and how to obtain the revised notice) in its next annual mailing to plan participants. _Note that most employers who sponsor self-insured health plans do not maintain a website for their health plan._

**Recommended Actions for Employers**

Employers who sponsor applicable health plans mentioned above should:

- Update the plan’s NPP to comply with new requirements by **February 16, 2026**;
- Distribute the revised NPP (or information about the material change to the notice) within the required 60-day timeframe, or in the alternative, post the updated NPP to the plan’s website by **February 16, 2026**, if applicable.
- Review, and if necessary, update HIPAA policies and procedures, HIPAA training materials, and/or business associate agreements (BAAs) to ensure alignment with the new requirements.

**Additional Resources**

- [HIPAA Final Rule Effective April 16, 2024](https://www.federalregister.gov/documents/2024/02/16/2024-02544/confidentiality-of-substance-use-disorder-sud-patient-records)
- [HHS Fact Sheet 42 CFR Part 2 Final Rule](https://www.hhs.gov/hipaa/for-professionals/regulatory-initiatives/fact-sheet-42-cfr-part-2-final-rule/index.html)

\]\]>The Wegovy Pill Is Here. Why This Isn’t a New Decision for Employers.https://www.sequoia.com/2026/01/wegovy-pill-employer-coverage/

Thu, 22 Jan 2026 18:42:14 +0000https://www.sequoia.com/?p=62479The arrival of the Wegovy pill is raising new questions, but employer coverage fundamentals remain the same. Learn what’s changed, what hasn’t, and how to keep your GLP 1 strategy consistent.

The post [The Wegovy Pill Is Here. Why This Isn’t a New Decision for Employers.](/content/2026/01/wegovy-pill-employer-coverage/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

GLP-1 medications never really left the conversation. Employers have been navigating questions about access, cost, and coverage for several years.

What feels different now is the FDA approval of an oral version of Wegovy, which adds a new layer to an already familiar discussion. Because it’s a pill, awareness is spreading quickly. Employees are asking about it, providers are discussing it, and employers are once again being pulled into the middle.

Our perspective is straightforward. The Wegovy pill does not create a new decision for employers. It reinforces the importance of having a clear and consistent GLP-1 strategy.

## A Quick Reset on GLP-1s and Coverage

[GLP-1 medications](/content/2025/11/employer-questions-about-glp-1/index.html) are a single drug class, but individual drugs within the class are approved for different indications, which is where coverage confusion often arises.

Some GLP-1s, such as Ozempic and Mounjaro, are approved to treat type 2 diabetes. Because diabetes is a covered medical condition, these drugs are generally included under standard pharmacy benefits.

Other GLP-1s, like Wegovy, Zepbound, and Saxenda, are approved specifically for weight management. Coverage for weight-loss medications is optional and varies widely by employer.

The Wegovy pill is approved for weight loss, not diabetes. As a result, its approval raises strategy and policy questions for employers, not new coverage obligations.

From a benefits and compliance standpoint, coverage still depends on FDA-approved indications and [plan design](/content/2025/04/glp1-costs-strategies/index.html).

## What Changed and What Didn’t

In December 2025, the [FDA approved](https://www.novonordisk.com/content/nncorp/global/en/news-and-media/news-and-ir-materials/news-details.html?id=916475) a once-daily oral version of Wegovy for long-term weight management in adults with obesity, or adults who are overweight with at least one related health condition. As the first oral GLP-1 approved specifically for weight loss, it’s getting a lot of attention.

What did not change is the broader GLP-1 landscape. Oral GLP-1 medications already exist. Rybelsus, for example, is an oral form of semaglutide with the same active ingredient used in Wegovy. But it’s approved at lower doses to treat type 2 diabetes.

The Wegovy pill uses the same underlying medication at higher doses and is approved specifically for weight management. While the formulation is similar, the approved use, dosing, and coverage considerations are different.

Oral Wegovy treats the same condition as injectable GLP-1s and belongs to the same therapeutic class. The approval adds another option, but at this stage it does not create a separate pill versus injection decision for employers.

It is also important to understand the context. The Wegovy pill has similar daily administration requirements to other oral GLP-1s. This includes taking the medication on an empty stomach and waiting before eating, drinking, or taking other medications. While manageable for some individuals, these requirements have historically affected real-world use and may similarly influence use of oral Wegovy.

The approval also includes an indication for reducing the risk of serious cardiovascular events in adults with established heart disease who are overweight or obese, which may further increase employee awareness and questions.

## What the Clinical Data Shows and What It Doesn’t

FDA approval was based on results from the [OASIS Phase 3 trial](https://www.wegovy.com/obesity/is-wegovy-right-for-me/wegovy-pill-results.html), a 64-week study comparing the Wegovy pill with placebo alongside diet and lifestyle changes.

Key findings include:

- Participants who remained on oral Wegovy lost about 16%-17% of body weight on average compared with about 2%-3% with placebo

About 28% of participants lost 20% or more of their body weight. There are several important points of context for employers:

- Oral Wegovy is offered in multiple dosage strengths, but lower doses are used for gradual dose increases, not as full therapeutic doses
- The trial evaluated outcomes at the highest dose, which is important when interpreting reported weight loss results
- About 1 in 5 participants, or 18%-20%, discontinued oral Wegovy during the trial

As with other GLP-1 therapies, real-world adherence and persistence will be important to monitor over time.

## Why “Oral” Doesn’t Automatically Mean Simpler

A pill may feel more approachable than an injection, but ease of use is more nuanced in practice.

The Wegovy pill must be taken:

- Once daily
- First thing in the morning
- On an empty stomach
- With no more than four ounces of water.

This is followed by a waiting period before eating, drinking, or taking other medications. For some individuals, this routine will be manageable. For others, it may be difficult to maintain consistently.

This matters because real-world outcomes depend not only on clinical trial results, but also on whether people can realistically stay on treatment over time.

## Pricing Headlines Don’t Answer Employer Cost Questions

Early media coverage has focused heavily on manufacturer pricing programs and cash-pay offers. These programs are designed to support launch and individual access, but they don’t reflect what employer health plans will ultimately pay.

- [Employer cost](/content/2025/11/glp-1-coverage-2025/index.html) will depend on factors that are still evolving, including:
- List price
- PBM contracting
- Formulary placement
- Utilization management
- How many employees start and remain on therapy

At this stage, there isn’t enough information to conclude that the oral option is more affordable or more sustainable than injectable alternatives.

## Coverage Decisions Will Vary and Take Time

As with any newly approved medication, the Wegovy pill is moving through standard PBM review processes. These reviews often take several months, but timing and [formulary placement can vary by PBM](/content/2025/05/how-to-choose-the-optimal-pharmacy-benefit-partner/index.html) and by employer plan design.

In practice, employers that already cover weight-loss medications may see new options become available sooner, while employers that exclude weight-loss drugs may see little change. Both scenarios are expected and reflect existing coverage decisions rather than urgency to act.

This variation doesn’t require employers to take immediate action. Many will reasonably choose to wait for more clarity on coverage terms, cost, and real-world use before revisiting their approach.

Regardless of coverage, employers may see increased employee interest and questions. Managing expectations through clear communication can be just as important as coverage decisions themselves.

## The More Useful Question for Employers

Rather than asking, “Should we cover the pill?” employers may find it more helpful to ask:

- Do we currently cover GLP-1s for weight loss, or have we chosen not to?
- If we do cover GLP-1s, is our approach consistent across formulations?
- If we exclude GLP-1s, are we clear about any exceptions or alternative options available instead?
- Are we prepared to explain our approach as employee awareness grows?

The Wegovy pill doesn’t change an employer’s underlying coverage decision. It increases the importance of clarity and consistency.

## What Employers Can Do Now Without Changing Coverage

Even though no change is needed today, here are practical steps employers can take now:

- Revisit your GLP-1 philosophy and ensure it’s clearly defined.
- Check for consistency across your weight-loss benefit approach.
- Prepare employee messaging as awareness grows.
- Understand PBM review timing to avoid surprises.
- Plan to revisit the topic later rather than reacting now.

Employers may also want to identify the signals that would prompt a future reassessment, such as formulary alignment across oral and injectable GLP-1s, clearer net cost data, or emerging real-world adherence trends.

## Our Point of View

The Wegovy pill is an important development, but it should not drive reactive benefit changes. Employers with a clear, indication-based GLP-1 strategy are better positioned than those responding to each new formulation as it arrives.

Other manufacturers, including Eli Lilly, are also developing oral GLP-1 options. This reflects growing interest in pill-based treatments, but whether oral versions will see broad, sustained adoption remains uncertain.

At this stage, clarity matters more than speed. Consistency matters more than novelty. Waiting for more information is a reasonable and responsible approach.

As PBM decisions, pricing dynamics, and real-world experience evolve, employers will be better equipped to determine how oral GLP-1s fit into their broader benefits strategy.

## Looking for More Information About GLP-1 Coverage?

If your team is asking broader questions about GLP‑1 medications — how they work, what they cost, and what employers should consider next — you may find our comprehensive FAQ helpful. It includes clear explanations, practical guidance, and links to past coverage analyses. [Read the full GLP 1 FAQ and related articles](/content/2025/11/employer-questions-about-glp-1/index.html).

\]\]>IRS Notice 2026-5: Key HSA Updates for Employershttps://www.sequoia.com/2026/01/irs-notice-2026-5-key-hsa-updates-for-employers/

Wed, 21 Jan 2026 17:31:17 +0000https://www.sequoia.com/?p=62438The IRS recently issued Notice 2026-5, clarifying new rules under the One Big Beautiful Bill Act (OBBBA) that impact Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs). While much of the guidance confirms existing practice, several provisions are particularly relevant for employers sponsoring HDHPs.

The post [IRS Notice 2026-5: Key HSA Updates for Employers](/content/2026/01/irs-notice-2026-5-key-hsa-updates-for-employers/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

The IRS recently issued Notice 2026-5, clarifying new rules under the One Big Beautiful Bill Act (OBBBA) that impact Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs). While much of the guidance confirms existing practice, several provisions are particularly relevant for employers sponsoring HDHPs.

**Telehealth Coverage Under HDHPs**

To contribute to an HSA, an individual must be enrolled in a qualified HDHP and have no disqualifying coverage. A qualified HDHP must meet statutory minimum deductible and maximum out-of-pocket limits and, with limited exceptions, cannot cover non-preventive services before the deductible is met.

The OBBBA permanently extended the telehealth safe harbor, allowing HDHPs to cover telehealth and remote care services before meeting the deductible without affecting HSA eligibility. This change applies to plan years beginning January 1, 2025.

Under IRS Notice 2026-5, only services listed on the [Medicare telehealth services list](https://www.cms.gov/medicare/coverage/telehealth/list-services), published annually by the Department of Health and Human Services (HHS), qualify for this safe harbor. If a service is not included on that list, it must meet the federal definition of telehealth under Social Security rules (SSA §1834(m) and 42 CFR §410.78) and any related HHS guidance. The IRS also clarified that in-person visits, medical equipment, and **prescription drugs furnished in connection with a telehealth visit** do not qualify pre-deductible unless they are treated as telehealth services under the above Medicare list of services or otherwise meet HHS’ guidance defining telehealth services. Unfortunately, regulators have not provided practical examples of when ancillary services (such as lab work or equipment tied to a telehealth visit) can be covered before the deductible. Until further guidance is issued, we recommend consulting legal counsel to determine whether a specific service falls within the scope of telehealth for HDHP compliance.

**Direct Primary Care Service Arrangement (DPCSAs)**

Starting January 1, 2026, employees enrolled in qualifying DPCSAs will remain eligible to contribute to HSAs. To qualify, the arrangement must:

- Provide primary care services through approved practitioners. _If the DPCSA provides services beyond primary care and a member opts only to use primary care services, the DPCSA will disqualify the individual from HSA eligibility._
  - Notice 2026-5 does not explicitly define “primary care services” beyond what the OBBBA provides. Instead, the Notice offers background examples of services they generally consider primary care, such as physical exams, vaccinations, urgent care, laboratory testing, and the diagnosis and treatment of common illnesses and injuries.
- Compensate providers solely through a fixed periodic fee for items and services provided (i.e., they cannot require a fixed periodic fee and bill separately for items and services, such as through insurance);
- Charge a fixed monthly fee (currently capped at $150 for individuals/ $300 for families, indexed for inflation);
- Exclude services such as procedures requiring general anesthesia, prescription drugs (other than vaccines), and lab services not typically administered in an ambulatory primary care setting.

HDHPs cannot pay DPCSA fees before the deductible, and these fees do not count toward the deductible or out-of-pocket maximum. Employees may use HSAs to reimburse their own DPCSA fees, but employer- paid fees outside the HDHP are not HSA-reimbursable.

**Individual Market Plans and HSAs**

Starting January 1, 2026, all bronze and catastrophic plans available through the Exchange are treated as HDHPs and HSA-compatible, even if they provide pre-deductible coverage or do not meet standard HDHP limits. Employers offering ICHRAs or QSEHRAs will not create disqualifying coverage, provided the underlying individual plan qualifies as an HDHP.

In addition, the IRS confirmed that if the employee purchases an individual bronze or catastrophic plan outside of the Exchange, the plan will be treated as a qualified HDHP if the same plan is available through the Exchange or if it is not available in the Exchange or Marketplace but the individual would have no reason to believe it is not available on the Marketplace or Exchange.

**Employer Takeaways**

Employers should be aware of these developments, and consider:

- Reviewing HDHP plan designs to ensure telehealth or other remote care services align with the Medicare telehealth list and excludes non-qualifying services such as in-person visits, equipment, and prescription drugs.
- Employers considering offering a DPCSA should carefully review whether the arrangement meets all statutory requirements to avoid unintentionally disqualifying employees from making HSA contributions.

**Additional Resources**

- [IRS Notice 2026-5](https://www.irs.gov/pub/irs-drop/n-26-05.pdf)

\]\]>Equity in 2026: What’s Changing in Long-Term Incentiveshttps://www.sequoia.com/2026/01/equity-trends-2026-long-term-incentives/

Fri, 16 Jan 2026 21:59:43 +0000https://www.sequoia.com/?p=62419Learn the top equity trends for 2026 and find out how companies are redesigning long-term incentives to manage costs and retain talent.

The post [Equity in 2026: What’s Changing in Long-Term Incentives](/content/2026/01/equity-trends-2026-long-term-incentives/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Remember when equity was the ultimate perk for investor-backed companies? Not long ago, it was the most prized part of a compensation package. But the past few years — marked by falling valuations, tighter equity pools, and changing employee expectations — have pushed companies to rethink how they structure long-term incentives (LTI). Today’s plans aim to do more than keep employees engaged. They’re also designed to preserve cash and stretch equity.

To see what that looks like in practice, we’ll dive into year-over-year data from Sequoia’s upcoming 2026 Compensation and Equity Trends Report.

## Fewer Stock Option-Only Programs

For startups and investor-backed companies, stock options have long been the go-to LTI. If your company took off and went public, the upside could be life changing. Then came 2023. Valuations dropped and many stock options sank underwater. Suddenly, employees were holding equity that didn’t feel like much of a reward.

It’s no surprise our data shows that options-only LTI plans are losing popularity, especially for non-executives. New-hire option-only grants for this group are down 11% since 2024. Refresh grants fell even faster, dropping 14% over the same period.

Companies aren’t walking away from options altogether. They’re scaling back as boards look to protect option pools and finance teams push for predictable costs. The result is smaller grants and a move toward equity vehicles that feel less like a gamble.

## RSUs Are Gaining Ground

RSU adoption has been climbing steadily across all employee segments, with the biggest jump in refresh grants for non-executives, up 11% since 2023.

More early-stage companies are rolling out RSU-only programs, something that was almost unheard of a few years ago. RSUs used to be more common at later stages.

Some companies offer RSUs instead of stock options to give employees clearer value, reduce downside because employees don’t have to purchase them, and give finance teams more predictable accounting. That combination makes RSUs an attractive choice for companies managing tighter equity pools.

## Refresh Grants Are Smaller

Refresh grants have gotten smaller as companies juggle valuation pressure and the cost of bigger new-hire awards.

In 2025, only 8% of non-executives received a refresh grant equal to half or more of their original new-hire grant — a 42% drop from 2023. Executives saw a similar slide, falling from 48% to just 5%. Most refreshes now come in at less than 30% of the initial grant.

Companies are tightening the reins to stretch equity pools and keep programs sustainable.

## Refresh Grants Are Less Frequent

Annual refreshes used to be the norm. Not anymore. Companies are spacing out grants to extend runway and tie awards to longer-term goals.

Annual executive refreshes dropped from 56% in 2023 to 49% in 2026, while three- to four-year cycles grew from 15% to 21%.

Longer refresh cycles help finance teams pace dilution and bring more predictability to equity values.

## What This Means for 2026

To recap: Equity programs aren’t disappearing. They’re being redesigned to fit a market where valuations are unpredictable, and equity pools are tight. Stock options still matter, but other equity vehicles are growing more popular. RSUs are gaining ground, refresh grants are smaller and less frequent, and boards are looking for ways to make equity meaningful without putting the company at risk.

Every grant now carries more weight. Companies that succeed will find the right balance between retention, cost control, and performance, while keeping equity programs sustainable for the long haul.

## Access More Sequoia Data

To see how your compensation program stacks up in the market, check out more of [Sequoia’s insights and reports](/content/reports/index.html), including the 2026 Compensation and Equity Trends Report when it becomes available later in January.

\]\]>Why Outsourcing Compensation and Benefits Is a Smart Move for Lean Teamshttps://www.sequoia.com/2026/01/why-compensation-benefits-outsourcing/

Tue, 13 Jan 2026 17:47:20 +0000https://www.sequoia.com/?p=62356Discover why more companies are outsourcing compensation and benefits tasks to trusted partners. Learn which processes deliver the most value and how outsourcing helps lean HR and finance teams stay accurate, compliant, and focused on growth.

The post [Why Outsourcing Compensation and Benefits Is a Smart Move for Lean Teams](/content/2026/01/why-compensation-benefits-outsourcing/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

For years, finance and HR teams defaulted to building capabilities in-house. Hire a team, build expertise, and own every step of the process. But as budgets tighten and workforce strategies change, more companies are turning to external advisors and partners to help shape compensation strategies, manage benefits programs, and scale operations. The right outsourcing relationship gives internal teams room to focus on business impact, not just keeping programs running.

According to [Deloitte’s Global Outsourcing Survey 2024](https://www.deloitte.com/us/en/services/consulting/articles/global-outsourcing-survey.html), 40% of organizations expect to increase their investment in third-party outsourcing.

Outsourcing is already widespread: 57% of companies outsource HR processes and 54% outsource finance tasks. And the way companies engage vendors is changing: 67% have adopted outcome-based models that focus on results, while the share citing cost reduction as the primary driver has dropped to just 34%.

So, what compensation and benefits processes make sense to outsource, and how do you explore this kind of partnership? Read on to learn more.

## Where Outsourcing Compensation Delivers the Most Value

Running compensation programs takes precision and time, even when the strategy is clear. For high-growth companies, the sheer volume of operational tasks can overwhelm lean HR teams. Job data needs constant upkeep, pay ranges must be applied accurately, and equity awards must be compiled and audited before board sign-off. Add merit cycles to the mix, and the workload becomes a real strain.

Outsourcing these responsibilities helps companies stay accurate and on schedule without draining focus from strategic work that moves the business forward. Commonly outsourced compensation tasks include:

- **Job architecture upkeep**: Maintain a clean job catalog, fit new roles into existing frameworks, and verify that salaries and equity align with established ranges
- **Market benchmarking support**: Audit survey matches and prep submission files to keep recruiting and internal mobility moving
- **Merit cycle mechanics**: Set up cycles in your comp platform, refresh in-cycle data, and create communication tools like change letters and manager guides
- **Policy application and manager enablement**: Apply rules like bonus proration or equity vesting during leave, and equip managers with training and guidance

These are repeatable, detail-heavy processes that require precision but rarely call for big-picture decisions. Handing them off to a trusted partner gives internal teams breathing room to focus on planning and retention.

## Where Benefits Outsourcing Adds Value

Eligibility checks. Enrollment updates. Invoice deadlines. Benefits work runs on a relentless calendar with little margin for error. For early- and growth-stage companies, these tasks often crowd out priorities like elevating employee experience or planning for growth. Outsourcing benefits operations brings relief where timing and compliance leave no room to slip.

Commonly outsourced benefits tasks include:

- **Eligibility and enrollment management**: Verify documentation, approve new hires and qualifying events, process terminations, and kick off COBRA actions
- **Carrier feeds and billing reconciliation**: Manage EDI and manual updates where feeds fall short, and reconcile monthly invoices against enrollment data to catch errors before they hit payroll
- **Payroll deduction support**: Format deductions for non-integrated payroll and run retro calculations on schedule
- **Compliance tasks**: Prepare ACA data with reporting partners, audit enrollment against carrier records quarterly, and check open enrollment files at year-end

Outsourcing keeps programs accurate and compliant without draining your HR team’s time.

## How to Decide What to Outsource

If you’re considering outsourcing, start by moving tasks that require precision on a regular cadence to external partners, while keeping strategy-related work in-house. This approach helps you maintain control over decisions that shape your company’s direction and frees up time by offloading operational work.

A simple way to start:

1. **Pick a contained scope**: Choose something manageable, like carrier billing reconciliation or the mechanics of a merit cycle. Define success metrics, such as time saved, error rates, and stakeholder feedback.
2. **Map decision rights and exceptions**: Keep edge cases with your core team. Route routine requests to the partner with clear SLAs.
3. **Review quarterly**: Check whether the pilot reduced rework and meeting load. Expand or scale back based on what the data shows.

## Free Your Team to Focus on Growth

Whether you’re building your first programs or managing a growing workforce, there’s an outsourcing solution designed for your stage. From [compensation cycles](/content/compensation/comp-outsourcing/index.html) to [benefits administration](/content/benefits/benefits-outsourcing/index.html), outsourcing helps you stay accurate, compliant, and focused on what matters most.

[Learn more about compensation and benefits outsourcing with Sequoia](/content/solutions/outsourcing/index.html).

\]\]>Initial Guidance Released on Trump Accountshttps://www.sequoia.com/2026/01/initial-guidance-released-on-trump-accounts/

Mon, 12 Jan 2026 14:54:37 +0000https://www.sequoia.com/?p=62269On December 2, 2025, the Department of Treasury and the IRS released Notice 2025-68 (Notice), which provides initial guidance on the new Trump Accounts that were announced as part of the One Big Beautiful Bill (OBBB). As a reminder, the Trump Accounts are a type of tax-advantaged child savings account that can be used for qualified expenses after the child turns 18. While the Notice provides general guidance on how Trump accounts work, additional guidance is still expected. Contributions can be made to the accounts beginning on July 4, 2026.

The post [Initial Guidance Released on Trump Accounts](/content/2026/01/initial-guidance-released-on-trump-accounts/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

On December 2, 2025, the Department of Treasury and the IRS released [Notice 2025-68](https://www.irs.gov/pub/irs-drop/n-25-68.pdf) (Notice), which provides initial guidance on the new Trump Accounts that were announced as part of the [One Big Beautiful Bill](/content/2025/07/one-big-beautiful-bill-act-employer-health-plan-impact-updated/index.html) (OBBB). As a reminder, the Trump Accounts are a type of tax-advantaged child savings account that can be used for qualified expenses after the child turns 18. While the Notice provides general guidance on how Trump accounts work, additional guidance is still expected. Contributions can be made to the accounts beginning on July 4, 2026.

**Initial Establishment of a Trump Account**

A Trump account can be established for children under the age of 18 who have a social security number; however, the account must be established before January 1st of the calendar year in which a child turns 18 (this is referred to as the “growth period” in the Notice).

In addition, children who are born between 2025 and 2028, are U.S. citizens, and have a social security number are eligible to receive $1,000 of seed money for the account through the government’s “pilot program contribution.”

“Authorized individuals” can establish a Trump Account for an eligible child by:

- Making the election on IRS Form 4547 (once the form is released), including at the same time the authorized individual files their 2025 income tax return (or any subsequent tax return); or
- Through an online tool or application on trumpaccounts.gov (this tool is expected to be available in the middle of 2026).

Legal guardians, parents, adult siblings, and grandparents of the eligible child are “authorized individuals” who can establish a Trump account. However, only individuals that anticipate the child to be their qualifying child under Internal Revenue Code (Code) § 1529(c) can also request the $1,000 pilot program contribution at the same time as establishing the account.

All initial Trump accounts must be established with the “initial trustee” (i.e., bank), selected by the Treasury. After an authorized individual elects to establish a Trump account, the Treasury Department or its agent will send that individual instructions on how to complete the opening of the account. These instructions will be sent beginning in May 2026.

**_Rollover Trump Accounts_**

Once the initial Trump Account is established, individuals can move their account to another provider (i.e., establish a “rollover Trump account”) if it is done during the growth period. Any current IRA trustee or custodian will be eligible to offer the rollover Trump accounts, as long they comply with various reporting and administration requirements.

Individuals can only have one funded Trump account at any time, meaning that, if a rollover Trump account is established, the entire balance of a prior Trump account must be rolled over into the new account.

After the child turns 18, a Trump account may be rolled over into an individual retirement arrangement or other eligible retirement plan.

**Contributions to a Trump Account**

Contributions to Trump accounts can be made beginning on July 4, 2026.

During the growth period, there are five types of contributions that can be made to a Trump account:

1. A pilot program contribution from the Treasury of $1,000 for an eligible child;
2. Qualified general contributions (funded by states, the United States, the District of Columbia, Indian tribal governments, or § 501(c)(3) tax-exempt organizations);
3. Employer contributions that are not included in gross income of the employee under Code § 128;
4. Qualified rollover contributions from a prior Trump account; and
5. Contributions from other sources (e.g., account beneficiary, parents, or any other person).

Pilot program contributions, qualified general contributions, and qualified rollover contributions are not subject to an annual contribution limit. However, all other contributions (contributions from employers and other sources) are subject to an aggregate annual limit of $5,000 (subject to cost-of-living adjustments after 2027).

Contributions to a Trump account are counted for the year in which the contribution is made (e.g., a contribution made on 1/31/2027 is for 2027 and cannot be applied to 2026).

**_Employer Contributions_**

Employers can make contributions to an employee’s Trump account or an employee’s dependent’s account under Code § 128. Contributions are limited to $2,500, subject cost-of-living adjustments after 2027, and are not included in the employee’s income. It is important to note that the $2,500 limit is per employee and not per dependent of the employee. For example, if an employee has two children that have Trump accounts, an employer with a Trump account contribution program may only contribute $2,500 in aggregate for 2026 to those Trump accounts.

To provide employer contributions, an employer must establish a § 128(c) “Trump account contribution program,” which is defined as a separate written plan of an employer for the exclusive benefits of its employees to provide contributions to the Trump accounts of such employees or dependents of such employers. Employers that establish a Trump account contribution program will also be subject to similar requirements that apply to Section 129 Dependent Care Assistance Programs (DCAPs) often also referred to as Dependent Care Flexible Spending Accounts, regarding discrimination, eligibility, notification, statements, and benefits.

The Notice clarifies that contributions can be made via salary reductions as a part of an employer’s Section 125 cafeteria plan if the contribution is made to the Trump account of the employee’s dependent, but not if the contribution is made to the Trump account of the employee, as this would be an impermissible deferral of compensation. The Treasury and IRS intend to address rules related to the coordination of Trump account contribution programs and Section 125 cafeteria plans in forthcoming proposed regulations.

In addition, the Departments of Labor and Treasury anticipate issuing guidance on how employers can structure contributions to Trump accounts to ensure they are not subject to the ERISA coverage framework.

**Distributions**

During the growth period, Trump accounts cannot allow distributions, except for qualified rollover contributions to another Trump account, distribution of excess contributions, or distribution upon the death of the account beneficiary. The account cannot make hardship distributions or be closed in order to distribute funds.

Starting January 1 of the calendar year in which the account beneficiary turns 18, distributions are permissible.

After the growth period, Trump accounts are generally subject to § 408 rules that apply to traditional IRAs (e.g., contributions, distributions, required minimum distributions, rollovers, Roth conversions, ordinary income taxation, and reporting).

**What’s Next**

Though this initial guidance provides some insight into the newly created Trump accounts, additional and definitive guidance is still needed, especially when it comes to the coordination of Trump accounts and § 125 cafeteria plans, as this will provide guidance for employers on how (and whether they want to) establish a Trump account contribution program or allow § 125 salary reductions for Trump account contributions.

**Additional Resources**

- [Notice 2025-68](https://www.irs.gov/pub/irs-drop/n-25-68.pdf)

[Connect with a Sequoia consultant](/content/form/consultation/index.html) to learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions. And if you’re already a Sequoia client, stay on top of your employer obligations with your [Compliance Checklist](https://admin.sequoia.com/connect) that highlights important compliance dates, action items, and resources.

\]\]>3 Tips for a Resilient Compensation Plan in 2026 https://www.sequoia.com/2026/01/compensation-tips-2026/

Wed, 07 Jan 2026 23:11:39 +0000https://www.sequoia.com/?p=54555Will 2025 bring more challenges or IPOs? Discover the key steps companies can take to ensure their compensation plan stays resilient no matter the market.

The post [3 Tips for a Resilient Compensation Plan in 2026](/content/2026/01/compensation-tips-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

In any market, your compensation plan should flex, not break. The strongest plans keep a simple ROI lens on cash and equity, use trusted market data, and treat equity like a long-term promise, not a quick cash fix. If you have a refresh or [merit cycle](/content/2024/11/merit-cycle-essentials/index.html) coming up, start with these three moves to keep your plan resilient all year.

## Understand Where You’re Getting the Biggest ROI

Make sure you have a strong handle on the elements of your compensation plan so you know where you can adjust, if necessary.

Start by evaluating base salary, incentives, and equity vehicles, and revisit your goals for each. Where are you seeing the strongest return on investment? For example:

- If your [merit budget](/content/2025/12/2026-merit-cycle-data/index.html) was designed for retention, are you seeing those results?

-  For annual incentives, are your plans self-funding, and are they effectively rewarding performance?

- Are you using [equity grants](/content/2024/07/executive-compensation-plans/index.html) wisely — motivating high performers in critical roles while considering both vested and unvested equity to avoid non-productive burn rate and little return equity overhang?

Once you’ve identified the areas where you’re seeing the most value, decide what elements you can trim or adjust to ensure your compensation package remains sustainable.

Finally, follow up by measuring whether your changes delivered the desired outcomes.

## Use Reliable Compensation Benchmark Data

If you aim to design your compensation program around competitive market data and a target market position, be aware that not all compensation data is reliable.

Only use [high-quality data](/content/total-comp-benefits/benchmarking/index.html) that accurately represents the market you’re targeting. Make sure it includes companies of similar size, industry, funding stage, locations, and other factors relevant to your business.

How can you tell high-quality data from data to avoid?

Bad data is typically free. This kind of data is often crowdsourced, unverified, and compares roles by title only. It fails to consider variations in duties, required experience, and job levels across companies. Worse, it’s usually managed by engineers and data scientists without compensation experience.

In contrast, high-quality data is evaluated and refined by compensation professionals who understand the complexities. Yes, this level of diligence comes at a cost. But when you pay for data, you’re paying for experts who prioritize data integrity, analyze trends year over year and quarter over quarter, and recognize that compensation benchmarking is both an art and a science.

## Don’t Treat Equity Like Cash

When cash is tight and companies are conscious of their runway, they tend to lean heavily on equity to attract and retain talent. But even in uncertain times, it’s important to [grant equity thoughtfully](/content/2024/08/executive-equity-compensation/index.html). If you’re a private company, don’t treat equity like cash.

Unlike annual incentives that are based on company performance, individual performance, or both in the previous year, equity is about someone’s expected future contribution to the company and should be used to drive loyalty and retention.

When employees don’t understand their equity grants, companies just grant them more, putting their equity pools at risk. Instead, invest in educating employees about equity and the potential value of their awards.

Bring it back to ROI — mindfully grant and communicate about your equity program and you’ll get more value from it.

## Building a Compensation Community

At Sequoia, we believe community is key to building a sustainable compensation database. If you’re curious about our community and how we help investor-backed companies design comp plans that drive business goals, [connect with our team](/content/compensation/index.html).

\]\]>Risk Resolutions for 2026: Get Your Insurance Program in Shapehttps://www.sequoia.com/2026/01/risk-management-resolutions/

Wed, 07 Jan 2026 14:41:07 +0000https://www.sequoia.com/?p=61791Start 2026 with a stronger risk strategy. Discover five resolutions to align your insurance program with growth and protect your business from emerging exposures.

The post [Risk Resolutions for 2026: Get Your Insurance Program in Shape](/content/2026/01/risk-management-resolutions/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Forget the gym. This year, let’s focus on strengthening your risk strategy.

For VC and PE-backed companies, growth moves fast. But risk moves even faster. New markets, new vendors, new products, and new expectations from investors, clients, and customers introduce exposures that aren’t always apparent until it’s too late.

These five resolutions will help you align protection with ambition and make sure your insurance program keeps pace with where your business is headed in 2026.

## 1\. Decide on Your Risk Tolerance

Every organization has a different appetite for risk. The problem is taking it without being explicit about where the lines are.

Define your tolerance clearly across key areas like cyber, regulatory compliance, intellectual property, and operational risk. This gives leadership teams a shared framework for decision-making and helps avoid surprises when something goes wrong.

**Why it matters:**

Investors expect aggressive growth, but speed to market often comes with tradeoffs. When risk appetite isn’t aligned across leadership, companies can drift into exposures that trigger regulatory scrutiny, reputational damage, or delays at the worst possible moment.

**Claim example:**

A fast-growing fintech company launches a new payment platform without full regulatory clearance. Six months later, regulators impose $2 million in fines and halt operations, delaying a major funding round.

**Insurance coverage to consider:**

- **Directors & Officers (D&O) Liability** – Protects leadership from claims tied to strategic decisions.
- **Errors & Omissions (E&O)**– Covers professional liability for compliance failures.
- **IP Defense Coverage** – Helps manage costs if your IP strategy leads to infringement claims.

**Investor perspective:**

Boards want clarity on risk appetite to ensure growth decisions don’t jeopardize valuation, exit timelines, or leadership credibility.

## 2\. Reassess Cyber Risk

Cyber threats emerge and change daily, while reliance on cloud infrastructure, third-party platforms, and data continues to grow. Yet many companies are still relying on policies designed for a very different risk environment.

**Why it matters:**

A cyber incident can derail a funding round, stall an IPO, or raise red flags during due diligence. Even well-managed companies can see deals slow or valuations soften if coverage risk gaps are uncovered too late.

**Claim example:**

A SaaS company suffers a ransomware attack during an IPO roadshow, exposing customer data and causing a $5 million revenue hit. Headlines read: “Tech Unicorn’s IPO Delayed After Cyber Breach.”

**Insurance coverage to consider:**

- **[Cyber Liability](/content/2025/09/cyber-liability-risk/index.html) Insurance** – Covers breach response, regulatory fines, and business interruption.
- **Technology E&O with Cyber Endorsement**– Protects against client claims tied to outages or breaches.
- **Contingent Business Interruption** – Adds protection if a cloud provider outage halts your operations.

**Investor perspective:**

Cyber resilience is now a core part of due diligence. Weak coverage signals operational risk and can reduce confidence in management’s preparedness.

## 3\. Strengthen Third-Party Risk Oversight

Vendors and partners continue to be one of the largest — and least controlled — sources of exposure.

Outsourced development, cloud hosting, payment processes, and service providers create dependency risk. When a third party fails, your company owns the fallout.

**Why it matters:**

[Third-party incidents](/content/2025/10/third-party-liability/index.html) don’t stay isolated. They impact customer trust, revenue continuity, and brand perception — all areas investors scrutinize closely.

**Claim example:**

A health-tech startup relies on a third-party billing vendor that suffers a data breach, exposing thousands of patient records. The startup faces lawsuits and negative press: “Vendor Breach Hits Healthcare Innovator.”

**Insurance coverage to consider:**

- **Contractual Risk Transfer** – Require vendors to carry cyber and liability coverage, naming your company as additional insured.
- **Supply Chain Insurance** – Covers losses from critical vendor disruptions.
- **Crime Coverage** – Protects against fraud or social engineering attacks involving third parties.

**Investor perspective:**

Strong vendor oversight signals operational maturity and reduces systemic risk.

## 4\. Refresh Travel Risk Protocols

[Global mobility is back, but the risks have changed](/content/2025/11/duty-of-care-risk-strategy/index.html). When your team travels, they could deal with political instability, health concerns, and regional security issues.

**Why it matters:**

Expansion into new markets often means sending teams abroad for sales meetings, partnerships, or product launches. Political unrest or health crises can disrupt operations and put employees at risk.

**Claim example:**

A tech executive travels to a high-risk region and is detained during civil unrest, triggering a $250,000 emergency evacuation and security response. Headlines read: “Startup CEO Evacuated Amid Political Crisis.”

**Insurance coverage to consider:**

- **Business Travel Accident Insurance**– Emergency medical and evacuation coverage.
- **Kidnap & Ransom Coverage** – Essential for executives traveling to high-risk regions.
- **Foreign Voluntary Workers’ Compensation**– Covers employees working overseas.

**Investor perspective:**

Safeguarding key talent during global expansion protects continuity and reinforces confidence in leadership.

## 5\. Build a Culture of Continuous Risk Awareness

[Risk isn’t a once-a-year renewal conversation](/content/2025/08/risk-management-is-a-story-worth-telling/index.html).

Companies that scale treat risk as something to revisit alongside strategy changes. That mindset shows up in training, governance, and how leadership responds to early warning signs.

**Why it matters:**

Investors want assurance that risk management scales with growth. A strong risk culture signals readiness for IPO, acquisition, or long-term independence.

**Claim example:**

A tech company ignores early compliance warnings and fails to train staff on new privacy laws. A major data mishandling incident leads to a $10 million class-action lawsuit and headlines: “Privacy Failures Sink Startup’s Valuation.”

**Insurance coverage to consider:**

- **Management Liability Package** – Combines D&O, EPL, and Fiduciary coverage for leadership.
- **Cyber and E&O Training Credits** – Many insurers offer premium discounts for companies that invest in risk training and tabletop exercises.
- **Parametric Insurance** – Innovative coverage for emerging risks like cloud outages or regulatory delays.

**Investor perspective:**

A proactive risk culture reduces surprises and builds confidence in leadership.

## Quick Wins for January

As with any resolution, taking on too much too quickly can stall progress and lead to burnout. Risk strategy doesn’t need to begin with a major overhaul. A few focused actions early in the year can surface gaps, reinforce governance, and set the tone for more proactive risk management in the months ahead. Start with these:

- Schedule a cyber coverage review and confirm limits align with current exposures.
- Audit vendor contracts for insurance requirements and compliance.
- Update travel protocols and confirm emergency response plans.
- Host a risk appetite workshop with leadership and document thresholds.
- Plan a tabletop exercise for a high-impact scenario, such as a cyber breach or regulatory investigation.

## Turning Resolutions Into Resilience

In 2026, let your insurance program work as hard as your growth strategy. By making risk management part of your organization’s operating discipline from the start of the year, you support growth with clearer guardrails and stronger protection as the business scales.

## Get a Second Perspective

If you want a second perspective on whether your [risk program](/content/risk/index.html) aligns with where your business is headed, a Sequoia consultant can help you evaluate coverage, identify gaps, and prioritize next steps. [Connect with a consultant](/content/form/consultation/index.html).

\]\]>The Telltale Signs You’re Ready to Leave Your PEOhttps://www.sequoia.com/2025/12/startup-growth-peo/

Tue, 23 Dec 2025 18:28:27 +0000https://www.sequoia.com/?p=61533Discover why PEOs work well for early‑stage startups but become limiting as you scale. Learn how founders can gain more control, reduce costs, and improve efficiency by bringing HR in‑house — setting the stage for sustainable growth and a stronger culture.

The post [The Telltale Signs You’re Ready to Leave Your PEO](/content/2025/12/startup-growth-peo/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

For early-stage founders and people leaders, growth feels like a dream and a test. You start with a handful of employees, wearing multiple hats, moving fast, and relying on scrappy systems to keep things running.

As you grow, the systems that once worked, like traditional PEOs, may start to show their limits. When that happens, here’s what to consider.

## 3 Things to Consider If You’re Thinking About Leaving Your PEO

### Customizing your offering

With a PEO, you saved time, got immediate access to payroll, compliance, and benefits administration experts, and reduced risk. Your [PEO was likely a huge advantage](https://one.sequoia.com/2023/11/how-growing-tech-startups-choose-the-best-peo-partner/).

But, as you grow, the one‑size‑fits‑all systems and support typical PEOs offer may no longer meet your business needs. When this time comes, transitioning from a PEO means you can explore a wider range of options and tailor them to your company’s needs instead of being limited by a PEO’s technology, cost‑management priorities, or preset healthcare menus.

Bringing HR in‑house while partnering with a benefits broker that offers administrative support gives you the flexibility to customize your healthcare plans, choose the systems that work best for your team, and shape the employee experience more intentionally. You’re able to design the right mix of tools and services, while still outsourcing key infrastructure so you can deliver a polished, professional employee experience without taking on unnecessary overhead.

### Cost and economics

When you’re small, the cost of a PEO often makes sense because it bundles together services you’d otherwise have to piece together on your own. Instead of hiring dedicated HR staff or paying separately for payroll, compliance, and benefits administration, the PEO’s single fee covers it all. For an early‑stage startup, this can be far more economical than building infrastructure internally, especially when you don’t yet have the scale to negotiate directly with carriers or justify specialized roles.

In those early days, the simplicity and predictability of the PEO’s pricing can be a smart trade‑off, giving leaders peace of mind that your employee’s care is in good hands while you focus on fundraising and growth.

But as you onboard more employees and grow your internal HR team, you may start to value the flexibility that going out to market, rather than adopting the curated options from a PEO, affords. Doing this can help you unlock better options that fit your employees’ diverse needs while keeping costs in check.

In addition, some PEO’s aren’t as transparent about their pricing as others, with hidden fees surfacing as you dive deeper into your partnership. By transitioning off a PEO, you’re not only eliminating the chances of incurring hidden fees but also forgoing the per-employee-per-month admin fees working with a PEO accumulates.

### Efficiency and speed

Efficiency is one of the biggest advantages of working with a PEO. Instead of building HR systems from scratch or juggling compliance tasks yourself, you can lean on your PEO’s expertise to get payroll, benefits, and onboarding up and running quickly. For a small team, this kind of plug‑and‑play support saves precious time for leaders.

As your company scales, relying on a PEO can begin to slow you down. Opening new entities globally, adding jobs to systems, or making changes often requires formal requests and waiting for responses from your outsourced team. By building your own HR infrastructure, with a broker and compensation consultant you trust, you can move faster, adapt systems to your growth, and empower internal employees who know your culture best to guide the process. This shift not only improves efficiency but also strengthens alignment between your people strategy and your business goals. As you consider building your own HR infrastructure, it helps to understand the broader landscape of solutions available. For a deeper dive, check out this [ranking](https://one.sequoia.com/2024/01/ranking-hr-solutions-for-your-tech-startup/) of HR solutions for tech startups.

Recognizing the signs isn’t just about identifying pain points, it’s about acknowledging if your organization has outgrown the limitations of a traditional PEO. The systems that carried you through the scrappy startup phase may no longer serve your ambitions.

Embracing scalable solutions like bringing only part of your HR in-house, you set the stage for sustainable growth, stronger culture, and the freedom to focus on what matters most: building something remarkable.

#### Ready to explore what’s next?

If now is the right time for you to consider a transition, we’re here to help. We’ll work together to navigate your options and provide an unbiased opinion about what path is right for your company’s growth and goals.

[Let’s talk](/content/lp/peo-transition-hr/index.html).

\]\]>The New Rules for Merit Cycles in 2026https://www.sequoia.com/2025/12/2026-merit-cycle-data/

Mon, 22 Dec 2025 18:39:35 +0000https://www.sequoia.com/?p=61517Merit cycles are entering a new era. Discover what 2026 demands from employers—from structured processes and targeted strategies to technology and equity insights—based on Sequoia’s latest data.

The post [The New Rules for Merit Cycles in 2026](/content/2025/12/2026-merit-cycle-data/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Merit cycles used to be one of the most predictable parts of compensation planning. Companies set a budget, spread increases fairly evenly, and called it a day.

Since 2023, that predictability disappeared. Market turbulence, inflation, fewer exits, and the rise of AI have changed how companies think about pay.

Today, [merit planning](/content/2024/11/merit-cycle-essentials/index.html) demands sharper focus and intentional choices. Many companies have adopted strategies that prioritize growth by giving well-above-average raises to roles that matter most, while others see only modest pay bumps.

To see how these changes play out, we’ll look at data from Sequoia’s 2026 Compensation and Equity Report for annual benchmarks, and the 2026 Compensation and Equity Trends Report for a year-over-year view.

## Smaller Companies Are Building Merit Structures Earlier to Reduce Risk

Not long ago, early-stage companies treated merit cycles as a “later” problem, relying on ad hoc adjustments, discretionary increases, and informal conversations about pay.

But in recent years, smaller companies learned the hard way that unstructured compensation practices come with real consequences like pay inequity and unpredictable costs.

At the same time, [employees have higher expectations](/content/2025/11/how-manage-wage-pressure-during-merit-cycle/index.html). Whether they join a 30-person Series A or a 3,000-person public company, they expect professionalism, a clear process, and transparency about how their pay will progress.

So now, young companies need to operate like more mature ones, even if they’re not quite there yet. Sequoia’s 2026 benchmarking data backs this up. Since 2023, structured merit adoption has jumped across all company sizes:

- 1–49 employees: up by 34%
- 50–99 employees: up by 25%
- 100+ employees: nearly 100%

This is a major change because historically, structure didn’t become universal until companies hit the 300-499 employee range. Much of this is possible thanks to technology that helps small teams run repeatable, enterprise-grade processes.

## Flat Budgets? Not Quite

On the surface, 2026 merit budgets look flat. But dig deeper and you’ll see big differences by role and industry.

Instead of spreading increases evenly, companies are funneling merit dollars into high-impact and specialized roles, especially in AI and machine learning. For these roles, merit increases can reach far above average at the 90th percentile.

Other competitive industries show the same trend. Companies are concentrating merit dollars on roles that drive technology advancements and business outcomes, with most of the biggest increases going to professional and management-level positions. This tells you just how strategic and intentional companies have become with their merit dollars.

And that philosophy shows up in overall budgets, too.

Average increases for professional roles dropped from 4.5% to 3.9%, and executive raises eased from 3.4% to 3.0%. Most increases now cluster in the 3–4% range.

## Merit Alone Won’t Cut It

Salary budgets are tight. Equity pools are strained. Boards want ROI. So, companies are layering in other levers:

- Short-term incentives
- Spot bonuses
- Performance-linked equity awards
- Targeted equity refresh grants

These tools let companies reward impact without permanently inflating fixed costs. They also give organizations more ways to recognize top performers.

## Other Key Benchmarks for 2026

Beyond merit budgets, companies are fine-tuning the details of how and when increases happen. Here’s what stands out:

### Eligibility for Increases

Most companies require tenure before merit eligibility. The sweet spot is 4–6 months (33%), giving managers time to assess performance. When budgets tighten, the wait stretches to 10–12 months (23%). Immediate eligibility (12%) is rare and usually seen only in aggressive hiring or competitive markets.

### Off-cycle Salary Adjustments

Off-cycle adjustments remain a core retention tool, with adoption hitting 100% at 1,000 employees. Most companies use them to keep talent (77%) and fix pay equity (58%). Counteroffer adjustments dropped from 50% to 30%, reflecting a softer job market.

As smaller companies adopt formal comp structures, off-cycle adjustments become less frequent.

### Measuring Effectiveness

Budget impact is still the most common metric (23%), but more companies now also look at equity, employee experience, and turnover. With this broader definition of success, the goal moves beyond sticking to the budget to making people feel valued and engaged.

## What 2026 Will Demand From Merit Planning

Succeeding in 2026 means rethinking the basics. These are the essentials for a strong merit cycle:

- Structured, repeatable merit cycles, even at small headcounts
- Targeted allocation strategies rather than uniform increases
- Clear communication around how and why increases are awarded
- Alignment between merit, incentives, equity, and performance systems
- Technology that lets small teams run enterprise-grade processes

## Get More Compensation and Equity Insights

Want to explore more of the data?

- Find out how your compensation and equity strategy aligns with Sequoia’s 2026 Compensation and Equity Report by scheduling a [complimentary consultation](/content/lp/2026-comp-equity-report-comp-consultation/index.html) with a Sequoia compensation expert.

\]\]>Beyond Attestation: What Employers Need to Know About Gag Clause Prohibitionhttps://www.sequoia.com/2025/12/beyond-attestation-what-employers-need-to-know-about-gag-clause-prohibition/

Fri, 19 Dec 2025 20:35:23 +0000https://www.sequoia.com/?p=61488Learn what the gag clause prohibition under the Consolidated Appropriations Act means for employer health plans, why compliance goes beyond attestation, and key steps to ensure contracts meet transparency requirements.

The post [Beyond Attestation: What Employers Need to Know About Gag Clause Prohibition](/content/2025/12/beyond-attestation-what-employers-need-to-know-about-gag-clause-prohibition/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

The Consolidated Appropriations Act 2021 (CAA) introduced a key transparency mandate, the prohibition of gag clauses, effective since December 27, 2020. This rule prohibits group health plans and carriers from entering into an agreement with a provider or third-party administrator (TPA) that would restrict the plan from providing cost or care information to plan participants, accessing de-identified claims data, and sharing the information per privacy regulations with a business associate. As part of this requirement, employers have been required to submit an annual attestation confirming compliance with the gag clause prohibition since 2023. For more information on the attestation requirement, see our article, _[Prohibition of Gag Clauses: Attestation Guidance for Employers](/content/2025/10/prohibition-of-gag-clauses-attestation-guidance-for-employers/index.html)_.

Importantly, compliance with the prohibition of gag clauses goes beyond filing the attestation. In this article, we explore what the gag clause prohibition really means for employer plan sponsors and the action that is required beyond the attestation.

**Gag Clause Explained & Who Must Comply**

A gag clause is any contract provision that restricts a plan’s ability to:

- Share provider-specific cost or quality-of-care information with participants or plan sponsors;
- Access de-identified claims data electronically; or
- Share such data with authorized business associates under HIPAA and other privacy laws.

Practically speaking, gag clauses are most often found in agreements with TPAs and pharmacy benefit managers (PBMs).

**Example**: A provision in a PBM contract preventing the disclosure of lower-price alternatives violates the prohibition of gag clauses by preventing disclosure of pricing information (or that medication may cost less without insurance).

[FAQs Part 69](https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-69) provide additional examples of prohibited gag clauses, including this one:

**Example**: If a contract allows a plan or carrier to share de-identified claims data with a business associate only at the discretion of a provider, network, TPA, or other service vendor, it contains an impermissible gag clause. This effectively restricts the sharing of de-identified claims data, which is prohibited.

All group health plans (including fully insured, level- funded, self-insured, and grandfathered plans) are subject to the prohibition requirement and attestation; however, excepted benefits (e.g., standalone dental or vision plans and certain employee assistance programs) and short-term, limited-duration insurance are exempt.

Starting with the 2025 attestation (due December 31, 2025), plan sponsors must confirm compliance not only in their own contracts but also in downstream agreements, meaning contracts between service providers (e.g., TPAs) and their subcontractors. If any downstream agreement contains a gag clause, it is a violation.

**Employer Takeaways**

The prohibition of gag clauses is more than an annual attestation; it requires active oversight of all plan-related contracts. With the above in mind, employers should:

- **Audit contracts** with TPAs, PBMs, and carriers to ensure they do not restrict access to cost or quality data, de-identified claims, or sharing with authorized business associates.
- **Include explicit language** prohibiting gag clauses in all agreements.
- **Verify downstream compliance** by confirming with TPAs that subcontractor agreements are free of restrictions.
- **Document efforts to remove any prohibited clauses** and, if a vendor refuses to remove a clause, **disclose this in your attestation**.
- **Submit your attestation on time** if your carrier or TPA does not handle it on your behalf.

**Additional Resources**

- [FAQs Part 57](https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-57)
- [FAQs Part 69](https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-69)
- [CMS Resources](https://www.cms.gov/cciio/programs-and-initiatives/other-insurance-protections/gag-clause-prohibition-compliance)
- Sequoia Foreword: [_Prohibition of Gag Clauses: Attestation Guidance for Employers_](/content/2025/10/prohibition-of-gag-clauses-attestation-guidance-for-employers/index.html)

_Disclaimer: The information provided is for informational purposes only and is not intended to constitute legal or tax advice. The information provided may not reflect the most current legal developments and may vary by jurisdiction. The content is for general informational purposes only and does not apply to any particular facts or circumstances. This communication does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents herein do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in the proper jurisdiction. The contributing authors of this content expressly disclaim all liability to any persons or entities with respect to any action or inaction taken based on the contents of this communication. © 2025 Sequoia Consulting Group. All Rights Reserved._

\]\]>Plan Ahead: Boost Benefits and Wellbeing Engagement with Sequoia’s 2026 Communication Resourceshttps://www.sequoia.com/2025/12/2026-wellbeing-communications/

Tue, 16 Dec 2025 14:05:20 +0000https://www.sequoia.com/?p=61316Discover Sequoia’s 2026 Wellbeing Calendar and Communications Playbook. Access monthly toolkits, expert webinars, and ready-to-use templates to keep employees engaged year-round.

The post [Plan Ahead: Boost Benefits and Wellbeing Engagement with Sequoia’s 2026 Communication Resources](/content/2025/12/2026-wellbeing-communications/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Another open enrollment season has come and gone, and as we approach the end of the year, it’s the perfect time to start planning your next benefits communication strategy. A strong plan ensures your employees are not only aware of the programs you’ve invested in but are also reminded to engage with them throughout the year.

At Sequoia, we know that consistent, meaningful communication drives participation and impact. That’s why each year we launch a 12-month Sequoia Wellbeing Calendar featuring monthly themes — such as Healthy Eating for Busy Lives, Financial Wellbeing for All Life Stages, and Neurodiversity and Cognitive Strengths — to help our clients keep wellbeing top of mind.

Each monthly toolkit includes:

- Educational guides for employees
- A Sequoia-hosted live webinar with an expert speaker
- Email, Slack, and Teams templates
- A supplemental guide with suggested content and activities to honor wellbeing observances for the month

Since the start of a new year can be both exciting and overwhelming, January’s theme is Reclaiming Your Energy. The month’s toolkit includes:

- 3 Shifts to Start the Year with Momentum, a guide that offers tips to restore energy
- Your Momentum Plan, a template that helps break down large goals into micro-goals
- Ideas for observing Cervical Cancer Awareness Month and Blood Donor Awareness Month

We’re excited to take it a step further in 2026 with the launch of our Wellbeing Communications Playbook. This resource is packed with best practices for employee engagement and tips on making the most of Sequoia OS features, including:

- Client guides on various wellbeing topics
- A library of employee facing guides to keep wellbeing going all year round
- Ready-to-post templates on the News Feed to publish and notify members via push notification or email
- Convenient communication materials from the vendors

Sequoia clients can access these tools by logging into Sequoia OS and going to the Wellbeing section.

Finally, check out our article [How to Create an Effective Benefits and Wellbeing Communication Plan](/content/2024/11/how-to-create-an-effective-benefits-and-wellbeing-communication-plan/index.html) to learn how to take inventory of your programs, integrate the programs into the employee lifecycle, build an annual communication plan, and package your offerings.

\]\]>ACA Employer Mandate Penalties: Litigation Updatehttps://www.sequoia.com/2025/12/aca-employer-mandate-penalties-litigation-update/

Tue, 09 Dec 2025 14:07:11 +0000https://www.sequoia.com/?p=60994On April 10, 2025, the U.S. District Court for the Northern District of Texas decision in Faulk Company, Inc. v. Xavier Becerra et al., determined that the Internal Revenue Service (IRS) lacked the authority to impose an Affordable Care Act (ACA) employer mandate assessment against Faulk Company, Inc. (Faulk) for failing to provide employee health coverage. This article explores the considerations at issue and the decision’s potential impact on employers.

The post [ACA Employer Mandate Penalties: Litigation Update](/content/2025/12/aca-employer-mandate-penalties-litigation-update/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

On April 10, 2025, the U.S. District Court for the Northern District of Texas decision in _[Faulk Company, Inc. v. Xavier Becerra et al.,](https://litigationtracker.law.georgetown.edu/wp-content/uploads/2024/07/Faulk_2025.04.10_MEMORANDUM-OPINION-AND-ORDER.pdf)_ determined that the Internal Revenue Service (IRS) lacked the authority to impose an Affordable Care Act (ACA) employer mandate assessment against Faulk Company, Inc. (Faulk) for failing to provide employee health coverage. This article explores the considerations at issue and the decision’s potential impact on employers.

**Background:**

Under the ACA, applicable large employers – those averaging at least 50 full-time employees (including full-time equivalents) in the prior calendar year – face penalties if they fail to offer health coverage to full-time employees or if the coverage does not meet required standards. When an employer does not provide compliant coverage, eligible employees may receive a premium tax credit to purchase insurance through an Exchange. If one or more employees receive this credit, the employer then may incur an Employer Shared Responsibility Payment (ESRP). The IRS notifies employers of potential ESRP liability through Letter 226-J, which requires a timely review and response by the employer. Depending on the facts and circumstances, the proposed assessment may ultimately result in an ESRP being imposed on the employer.

Important to the issue in _Faulk_, the ACA directs the responsibility for determining employer compliance to the Department of Health and Humas Services (HHS). If HHS finds an employer noncompliant, it must notify the Exchange, which in turn issues two notices, one advising the employer of potential ESRP liability and another outlining the right to appeal. When an ESRP penalty is confirmed, HHS must certify that finding to the employer. Once HHS certifies liability, the IRS has authority to assess and collect the ESRP.

However, in an attempt to streamline the above process, HHS issued [45 C.F.R. § 155.310(i)](https://www.ecfr.gov/current/title-45/subtitle-A/subchapter-B/part-155/subpart-D/section-155.310), delegating the duty to certify that an ESRP penalty is owed to the IRS. As mentioned above, the IRS issues Letter 226-J to complete such certification requirement.

**_Faulk Company, Inc. v. Xavier Becerra et al._**

Faulk, a Texas-based janitorial services provider for schools, stopped offering ACA-required employee health coverage in 2019. In 2021, the IRS issued Letter 226-J, proposing an ESRP. Faulk paid the penalty “under protest”, later filed a refund claim, and ultimately sued in June 2024. Faulk argued that its due process rights were violated when the IRS issued Letter 226-J before HHS certified the ESRP, as required by the ACA.

The central issue was whether HHS had authority to delegate its certification responsibility to the IRS. The court ruled that the ACA does not authorize HHS to delegate its duty to certify to an employer that an ESRP penalty is owed. As such, HHS exceeded its authority under the ACA by attempting to delegate this function, making the IRS’s ESRP assessment improper. The IRS was ordered to refund $205,621.71 to Faulk, which was the amount they previously paid for its 2019 ESRP penalty.

**Employer Takeaways**

It is important to note that there is no nationwide injunction against the agencies regarding the current assessment process; the relief in this decision is applicable solely to this particular set of facts. That said, this decision could have significant implications for past and future ESRP assessments. If upheld, it may require the IRS and HHS to develop a new process for imposing ESRPs. However, because the ruling could be overturned on appeal, employers should consult legal counsel before relying on this decision. Sequoia will continue to monitor and communicate ACA Employer Mandate litigation updates, as available.

**Additional Resources:**

- _[Faulk Company, Inc. v. Xavier Becerra et al.](https://litigationtracker.law.georgetown.edu/wp-content/uploads/2024/07/Faulk_2025.04.10_MEMORANDUM-OPINION-AND-ORDER.pdf)_
- [45 C.F.R. § 155.310(i)](https://www.ecfr.gov/current/title-45/subtitle-A/subchapter-B/part-155/subpart-D/section-155.310)

\]\]>Why Chasing AI Efficiency Alone Can Undermine Growth: Lessons From Finance and HR Leadershttps://www.sequoia.com/2025/12/cfo-lessons-ai-talent-wars-efficiency-growth/

Mon, 08 Dec 2025 19:57:34 +0000https://www.sequoia.com/?p=60901This blog explores how CFOs can navigate the AI talent wars and avoid the trap of chasing efficiency at the expense of growth. Drawing insights from leaders at Salesforce, Snowflake, Minka, and Sequoia, it highlights three critical themes: moving from blanket AI adoption to fitf or purpose strategies, balancing the dilemma of upskilling versus hiring premium talent, and rethinking budgeting to sustain innovation while driving productivity. The piece provides actionable guidance for CFOs on ROI measurement, talent investment, and compensation structures in the age of AI transformation.

The post [Why Chasing AI Efficiency Alone Can Undermine Growth: Lessons From Finance and HR Leaders](/content/2025/12/cfo-lessons-ai-talent-wars-efficiency-growth/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

A $250 million offer for a single AI engineer has put a spotlight on the [fierce competition for talent](https://www.nytimes.com/2025/07/31/technology/ai-researchers-nba-stars.html) and the financial strain it creates. At The Grove Conference this year, leaders from Salesforce, Snowflake, Minka, and Sequoia came together on a panel to discuss how the battle for [top AI talent is driving industry shifts](/content/2025/07/ai-and-engineering-jobs/index.html). We heard three key themes emerge: moving past blanket AI adoption, the upskilling versus hiring dilemma, and the budgeting challenges that come with these shifts.

The panel featured:

- Marisabel Agosto, vice president of strategic partnerships at Sequoia
- Lori Castillo-Martinez, executive vice president of workforce transformation at Salesforce
- Allan Brown, vice president of total rewards at Snowflake
- Reed McBride, managing partner at Mintaka
- Jin Tan, compensation advisory manager at Sequoia

Read on for highlights from the conversation or watch the full session below.

[iframe](https://player.vimeo.com/video/1130026176?badge=0&autopause=0&player_id=0&app_id=58479)

## From Blanket Adoption to Fit-for-Purpose

The journey toward effective AI integration has been marked by trial and error, with early strategies often prioritizing scale over specificity. In the early stages of AI adoption, many organizations began with a blanket approach, rolling out a single solution across the enterprise instead of considering specific use cases. As Lori Castillo-Martinez from Salesforce noted, this strategy often fails to deliver meaningful outcomes. She said, “In the beginning, I think we did a lot of, ‘let’s deploy across the enterprise.’ Now we’re in the phase of fit-for-purpose.”

For finance leaders, the shift from blanket adoption to fit-for-purpose deployment is more than a technical pivot. It’s a financial strategy shift. It means going from diffuse costs and unclear returns to direct return on investment measures with tools and costs aligned.

**Lessons on Measuring Return on Investment with a Fit-For-Purpose Approach**

- Map automation opportunities to cost centers: Identify which processes consume the most time and budget, then target those for automation first.
- Invest in diagnostic expertise: Bring in specialists (internal or external) who can pinpoint high impact use cases rather than relying on broad enterprise deployments.
- Procure tools with measurable outcomes: Select solutions designed for specific workflows (e.g., contract review, forecasting) and tie procurement decisions to key performance indicators like cycle time reduction, error rate improvement, or cost savings.
- Pilot before scaling: Run controlled pilots in finance or operations to validate ROI before expanding across the enterprise.

Salesforce’s experience illustrates the payoff in a fit-for-purpose approach. The company unlocked new efficiencies after rethinking use cases, procurement strategy, and organizational mindset.

The shift to a fit-for-purpose approach also raises a critical hiring strategy question. Should you upskill your existing workforce to maximize adoption, or pay premium rates for specialized talent who can deliver immediate impact? The right answer depends on balancing cost, speed, and long-term capability building.

## Upskilling Versus Paying Top Dollar for Talent

The critical question is, do you invest in developing skills internally, or pay a premium for external expertise? The dilemma is playing out in what Allan Brown of Snowflake described as “a talent grab,” with PhDs commanding extraordinary salaries. The decision between making a time and money investment in training, or hiring someone who can deliver immediate impact, is high stakes when you’re offering compensation packages worth hundreds of millions.

While the competition for top talent is fierce, advances in AI tools are simultaneously reshaping the equation by boosting productivity and freeing up resources for training and hiring.

Snowflake’s sales team, for instance, now uses an internal app to generate customer decks in minutes, a process that previously took days. This shift illustrates how AI is not only accelerating routine tasks but also redefining how teams allocate their time and expertise. Tools like Cursor enable non-engineers to build and iterate quickly, blurring traditional boundaries between technical and non-technical roles where teams would have added headcount in the past.

For finance leaders, the decision to invest in external expertise or upskill existing teams ultimately comes down to balancing speed, cost, and sustainability.

The challenge is to ask the right questions

- How quickly do we need AI capabilities to deliver measurable return on investment, and is the premium for external talent justified by that speed?
- Can internal training scale across functions without creating dependency on a few specialists?
- What incentives will retain upskilled employees, and how should compensation structures shift when hiring premium talent?
- Will today’s choices build durable capabilities that reduce reliance on external hires over time?

Ultimately, framing the talent debate through these questions enables finance leaders to move past blanket adoption and toward a disciplined, fit‑for‑purpose strategy that not only maximizes financial returns but also strengthens long‑term organizational resilience.

## Budgeting for Transformation Without Sacrificing Growth

For finance leaders, the rise of AI and automation also presents a budgeting paradox: how to capture efficiency gains without undermining the innovation that drives long-term enterprise value. Cost-cutting alone is not a strategy. As Castillo-Martinez from Salesforce cautioned, “Sometimes, as you race toward efficiency, you lose growth opportunities and innovation opportunities.”

Ensuring that every dollar is reallocated in the name of efficiency is not enough. True competitiveness requires positioning the company to grow. Achieving that growth demands a broader lens, one that rethinks both compensation structures and capital allocation to ensure resources are fueling long‑term value creation.

Sequoia’s compensation advisor, Jin Tan, highlighted a trend he’s seeing in the space for AI talent as milestone‑based incentives and frontloaded equity grants are becoming more common. Companies are willing to give larger equity stakes to fewer hires, reflecting the expectation that leaner teams can still deliver milestone outcomes.

For finance leaders, this requires balancing cash burn against equity dilution, while ensuring incentives align with measurable business results. This is where traditional KPI-based compensation comes up short. When the stakes are high, incentives must also safeguard organizational stability. That means evolving performance metrics beyond traditional productivity KPIs to include retention, satisfaction, and long‑term value creation, ensuring efficiency gains strengthen rather than undermine the enterprise.

Ultimately, effective budgeting for transformation requires finance leaders to:

- Reallocate savings from automation into innovation budgets to sustain growth
- Design compensation structures that balance cash, equity, and milestone-based incentives
- Update key performance indicators to measure retention and satisfaction, not just productivity
- Invest in continuous learning and collaboration, recognizing that AI adoption succeeds only when paired with human expertise

By approaching AI transformation through this financial lens, leaders can avoid the trap of shortsighted efficiency and instead build a model where leaner teams, smarter incentives, and fit-for-purpose investments drive both productivity and sustainable growth.

In the end, the AI talent wars are not just about competing for engineers, they are about redefining how finance leaders allocate capital, measure return on investment, and balance efficiency with innovation. Moving from blanket adoption to fit-for-purpose investments, weighing upskilling against premium hires, and rethinking compensation structures are all part of a broader financial strategy. The finance leaders who succeed will be those who treat AI not as a cost cutting exercise, but as a lever for sustainable growth, building leaner, smarter organizations that can thrive in the next era of transformation.

**More from the Grove Conference 2025:**

- [GLP-1 Coverage: Balancing Cost and Care](/content/2025/11/glp-1-coverage-2025/index.html)
- [Liquidity in Limbo: How Investor-Backed Companies Can Thrive Amid Uncertainty](/content/2025/12/grove-conference-liquidity-in-limbo/index.html)
- [Growth, Leadership & Technology: Lessons from Alloy and Bilt](/content/2025/12/growth-leadership-technology-alloy-bilt/index.html)

\]\]>Growth, Leadership, and Technology: What We Learned From Alloy and Bilthttps://www.sequoia.com/2025/12/growth-leadership-technology-alloy-bilt/

Thu, 04 Dec 2025 22:09:59 +0000https://www.sequoia.com/?p=60858Discover how Alloy and Bilt scaled with trust, talent, and technology. Insights for CHROs on preserving culture, building partnerships, and leading workforce transformation.

The post [Growth, Leadership, and Technology: What We Learned From Alloy and Bilt](/content/2025/12/growth-leadership-technology-alloy-bilt/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Growth isn’t just about numbers; it’s about people, partnerships, and smart tools. That’s the story Kim Nguyen, chief people officer at Alloy, and Ciara O’Sullivan, senior director of people at Bilt shared when they sat down to compare notes with Michele Floriani, Sequoia’s chief marketing officer at the Grove Conference in New York earlier this year. They covered scaling quickly, the importance of trust, and technology as a catalyst. Here’s how the dialogue unfolded.

## Scaling Without Losing Your Soul

Rapid growth can come at the expense of culture, clarity, and trust. Alloy and Bilt’s stories prove it doesn’t have to.

Nguyen described how Alloy has scaled to serve more than 700 global financial institutions and fintech companies, without losing sight of its identity. Operating at the intersection of two powerful trends, industries going digital, and fraud volumes rising, Alloy’s end-to-end identity and fraud prevention platform enables clients to grow without risk, a critical need in today’s market.

Yet Nguyen emphasized that technology alone isn’t the engine of growth — talent is. Her focus is on how to attract, retain, and position top talent to fuel Alloy’s expansion. By creating smart structures early, keeping communication clear, and leveraging digital ecosystems and automation, Alloy avoided the chaos that often accompanies rapid growth. The company’s strategic partnerships in the ecosystem, according to Nguyen, were especially important. Partnering with Sequoia, for example, to design a robust and scalable total rewards program, ensured that growth was supported by value-driven systems that reinforced culture rather than diluted it.

Nguyen also underscored Alloy’s ambition: not to be good or even great, but remarkable. Achieving that requires choosing partners who understand Alloy’s business, strategy, and goals, and who share a commitment to integrity. Since 2020, Alloy has navigated unpredictable market conditions rightsizing programs, balancing cost containment with employee engagement, and expanding globally with offices in New York’s Union Square and London. Through each stage, the focus has remained on harmonizing growth with employee satisfaction and cultural integrity.

The lesson for people leaders? Scaling doesn’t mean losing your soul. With intentionality, investing in talent, and choosing partners who align with your values, you can grow at speed while preserving the culture that makes your organization remarkable.

## Leadership Is About Trust

Both panelists agreed that leadership isn’t about KPIs alone. It’s about creating an environment where people feel trusted, supported, and heard. Trust is the foundation that allows organizations to scale, innovate, and sustain culture through change.

O’Sullivan shared how trust has been paramount in every decision she’s made. Her very first hire wasn’t a person — it was a partner: Sequoia One. By leaning on that trusted partnership, she was able to keep her people team lean — just six professionals supporting 220 employees — while still delivering robust HR services. From intentional hiring benchmarks for engineers to benefit renewals and wellbeing bundles, trust in Sequoia One allowed her to focus on strategy rather than firefighting.

She emphasized that at Bilt, tools like Wellhub have become central to employee engagement and retention. In fact, Wellhub consistently surfaces as an essential employee benefit. That kind of insight reinforces that when employees feel their wellbeing is prioritized, they trust leadership, and that trust translates into loyalty and performance.

Nguyen highlighted another dimension of trust: the ability to rely on partners for clarity and thought partnership in complex, high-stakes processes. Preparing for board and compensation committee meetings can take months, requiring benchmarking, alignment of business and talent strategies, and ultimately weaving it all into a compelling narrative. For Nguyen, having access to best-in-class data and advisors meant she could make informed decisions quickly and confidently.

She described a recent example where a scheduled hour-long meeting with advisors was completed in 30 minutes because they anticipated blind spots and brought forward insights proactively. That trust enabled her to push into “radical ideation,” exploring extremes and then landing on a balanced, pragmatic solution that was perfectly aligned with Alloy’s fiscal year strategy.

The lesson for people leaders? Trust and care are multipliers. Whether it’s trusting external partners to extend your team’s capacity, trusting advisors to challenge your thinking and uncover blind spots, or ensuring your employees feel the care that comes with wellbeing benefits, leadership rooted in trust and care creates the conditions for alignment, engagement, and sustainable growth.

## Technology as a Catalyst

Technology wasn’t treated as a buzzword in this conversation. It was positioned as the foundation for smarter, faster, and more human-centered decisions. The message was clear: The next phase of workforce transformation will be defined not by tools alone, but by how leaders harness them to scale responsibly, manage risk, and free people to focus on higher- value work.

O’Sullivan described Bilt’s company culture of AI exploration as a “green meadow,” an open invitation for employees to experiment, test, and learn. In her words, “We don’t know what AI is going to be in six days, never mind six months or six years. \[We tell employees\] please go out and experiment and come back to us.” That freedom to explore created energy and curiosity, but it also surfaced a common challenge, data scattered across countless tools.

The breakthrough came when O’Sullivan’s team anchored experimentation in a single source of truth, the Sequoia platform. Whether benchmarking compensation or analyzing HR data, leaders could trust that what they were seeing was accurate and consistent. In a world of uncertainty, that reliability became a stabilizing force, allowing teams to innovate without losing confidence in the fundamentals.

For CHROs and HR leaders, technology isn’t just about efficiency. It’s about enabling trust, scalability, and human connection. The next chapter of workforce transformation will be written by leaders who use technology to unify data, anticipate employee needs, and create space for people to do their best work.

The takeaway from this panel is simple: Growth and technology deliver impact only when grounded in trust, care, and leadership. The organizations that thrive are those that keep people at the center.

\]\]>Liquidity in Limbo: How Investor-Backed Companies Can Thrive Amid Uncertaintyhttps://www.sequoia.com/2025/12/grove-conference-liquidity-in-limbo/

Thu, 04 Dec 2025 18:57:36 +0000https://www.sequoia.com/?p=60849Learn strategies for navigating delayed liquidity and extended fundraising cycles, plus insights on efficient growth and emerging paths to liquidity.

The post [Liquidity in Limbo: How Investor-Backed Companies Can Thrive Amid Uncertainty](/content/2025/12/grove-conference-liquidity-in-limbo/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

At the Grove Conference 2025, Sequoia’s premier client event, the session _Liquidity in Limbo_, explored one of today’s most pressing challenges for founders and finance leaders: operating in a market where liquidity events feel distant and fundraising takes longer. The discussion revealed strategies and leadership lessons for staying resilient and strategic in these uncertain times.

The panel, moderated by Sequoia’s VP of Compensation Advisory **Kyle Holm**, featured:

- **Ron Will**, six-time CFO, formerly of Tonal, Hinge Health, and Ripple
- **Kyle Howard-Johson**, vice president, Volition Capital
- **Judy Gilbert**, chief people officer, Oura

Read on for highlights from the panel or watch a recording of the full session, including a Q&A at the end.

[iframe](https://player.vimeo.com/video/1130024592?badge=0&autopause=0&player_id=0&app_id=58479)

## The Market Reset: From Growth-at-All-Costs to Efficient Growth

After the 2021–2022 era of aggressive growth, investor-backed companies have shifted their focus from IPO toward profitability and optionality.

Today, the conversation centers on achieving efficient growth, which means balancing expansion with a clear path to profitability, guided by principles like the Rule of 40. At the same time, liquidity remains tight, and IPO markets are quiet, even as investors sit on significant funds and pursue multi-stage strategies to deploy capital.

These new priorities have profound implications for how companies approach fundraising and liquidity planning.

## Fundraising Realities in 2025

Fundraising looks very different than it did a few years ago. Gone are the days of 10-day term sheets. Now, companies should expect a six- to nine-month process. AI continues to dominate investor interest, while other sectors face heightened scrutiny. For leadership teams, transparency, and communicating timelines and expectations to employees helps maintain trust and morale during these extended fundraising cycles.

Longer fundraising timelines also means leaders must make tough decisions to preserve runway and signal strength to investors.

## Trade-Offs When Liquidity Is Uncertain

When liquidity feels out of reach, tough decisions become unavoidable. Personnel costs often account for 50–65% of expenses, making headcount the biggest lever for managing burn.

Leaders must embrace relentless prioritization, focusing on the most critical initiatives, and shelving less urgent projects. Proactive cost discipline signals strength to investors, who expect companies to make hard choices before entering a fundraising process.

Beyond cost control, companies preparing for M&A or IPO need to ensure their fundamentals are solid.

## Metrics That Matter for M&A and IPO Readiness

Companies preparing for M&A or IPO must have a firm grasp on their metrics. They must have well-documented financial indicators, such as sales productivity, customer acquisition costs, retention rates, and margin potential.

People metrics matter, too. Aligning teams around relevant benchmarks and educating them on what “good” looks like strengthens execution. There will be plenty of scrutiny during a deal, so hygiene is non-negotiable: clean cap tables, contracts, and payroll processes.

Despite the challenges, there are emerging paths to liquidity for companies that stay disciplined.

## Emerging Paths to Liquidity

Opportunities are appearing. The M&A window is reopening as valuations normalize, and private equity firms are stepping in to provide early buyouts that bridge the gap to IPO readiness. Interest rate cuts may further unlock capital, creating tailwinds for companies positioned to take advantage of these shifts.

Liquidity may be in limbo, but disciplined execution, transparency, and strategic optionality position companies for success.

**More From the Grove Conference 2025:**

- [GLP-1 Coverage: Balancing Cost and Care](/content/2025/11/glp-1-coverage-2025/index.html)
- [Growth, Leadership & Technology: Lessons from Alloy and Bilt](/content/2025/12/growth-leadership-technology-alloy-bilt/index.html)

Related stories:

- [The Founder Mindset Shift: Why M&A Is the New IPO](/content/2025/09/founder-exit-strategy/index.html)
- [Is Computer Science the New Liberal Arts Degree?](/content/2025/07/ai-and-engineering-jobs/index.html)
- [AI’s Impact on Compensation Plans in 2026: What Investor-Backed Companies Need to Know](/content/2025/10/ai-compensation-plan/index.html)

\]\]>California Legislative Updates Impacting Group Health Plan Sponsors Taking Effect in Late 2025 and Early 2026https://www.sequoia.com/2025/12/california-legislative-updates-impacting-group-health-plan-sponsors-taking-effect-in-late-2025-and-early-2026/

Tue, 02 Dec 2025 17:56:08 +0000https://www.sequoia.com/?p=60807California has recently enacted several new laws that will impact employer compliance obligations over the next several months. These changes begin as early as September 2025 and continue into January 2026, affecting coverage mandates, preventive care standards and pharmacy benefit manager (PBM) practices.

The post [California Legislative Updates Impacting Group Health Plan Sponsors Taking Effect in Late 2025 and Early 2026](/content/2025/12/california-legislative-updates-impacting-group-health-plan-sponsors-taking-effect-in-late-2025-and-early-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

California has recently enacted several new laws that will impact employer compliance obligations over the next several months. These changes begin as early as September 2025 and continue into January 2026, affecting coverage mandates, preventive care standards and pharmacy benefit manager (PBM) practices.

**AB 260: Abortion Medication Coverage**

AB 260, effective September 26, 2025, requires California regulated health plans with prescription drug benefits to cover mifepristone even when Food and Drug Administration (FDA) labeling or federal risk evaluation strategies would otherwise limit its use. Plans must also cover approved brands or generic equivalents approved by the World Health Organization, the National Academies, or the State of California, even if those products do not have FDA approval for abortion. This mandate applies to fully insured plans issued in California and to plans written outside of California that cover California residents. It does not apply to self-insured Employee Retirement Income Security Act (ERISA) plans. These requirements were passed in response to ongoing federal litigation and uncertainty around access to medication abortion.

Employer Action:

- Employers with fully insured plans should confirm that their carriers have updated formularies and approved the required coverage.

**AB 144: Preventive Care Services**

AB 144 requires California regulated health plans to cover preventive services without cost-sharing or prior authorization. These services include those recommended by the U.S. Preventive Services Task Force, the Advisory Committee on Immunization Practices, the Health Resources and Services Administration, and the American Academy of Pediatrics for children as those recommendations existed on January 1, 2025. This means California is “locking in” the federal and professional standards that were in place on that date, regardless of any future changes or litigation at the federal level. After January 1, 2025, the California Department of Public Health (CDPH) may update or expand the list of covered services based on guidance from trusted medical organizations, and plans must implement those changes within 15 business days. AB 144 was enacted to protect access to preventive care considering recent federal litigation challenging similar requirements under the Affordable Care Act. This law applies only to fully insured plans and will not apply to self-insured ERISA plans.

Employer Action:

- Employers with fully insured plans should monitor updates from CDPH and confirm that carriers are applying any new or revised preventive service mandates.

**SB 41: Pharmacy Benefit Manager (PBM) Regulation**

SB 41, effective January 1, 2026, introduces a broad PBM oversight framework. The law bans spread pricing and requires PBMs to use pass-through pricing models so plans pay pharmacies what PBMs reimburse them, plus a transparent administrative fee. Manufacturer rebates must be returned to the plan and used to reduce premiums or participant costs. PBMs may only charge a flat management fee not tied to drug prices, although performance bonuses based on cost savings are permitted. The law also adds network parity rules, prohibits discrimination against non-affiliated pharmacies, and requires PBMs to obtain a state license by 2027. Additionally, PBMs must act in good faith and in the best interests of their clients, creating fiduciary obligations similar to those under ERISA. These requirements were enacted to address concerns about unclear PBM pricing practices and rising drug costs.

Employer Action:

- Self-insured plan sponsors should review PBM contracts for spread pricing and exclusivity clauses, update agreements to reflect SB 41 obligations, establish audit rights, and confirm licensure plans.
- Fully insured plan sponsors should work with their carriers to ensure PBM arrangements will meet the new standards.

California’s latest health plan laws signal a push toward protecting access to reproductive health care, maintaining preventive care standards, and increased transparency in prescription drug pricing. Employers with California employees, whether sponsoring fully insured plans or managing PBM contracts for self-insured plans should act to review their arrangements, confirm compliance and prepare for these changes.

**Additional Resources:**

- California [AB 260](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB41)
- California [AB 144](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260AB144)
- California [SB 41](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB41)

\]\]>GLP-1 Coverage: Balancing Cost and Carehttps://www.sequoia.com/2025/11/glp-1-coverage-2025/

Tue, 25 Nov 2025 17:37:50 +0000https://www.sequoia.com/?p=60736How are employers investing in GLP-1 coverage. Learn their thoughts on cost management, PBM strategies, wraparound programs, and ROI.

The post [GLP-1 Coverage: Balancing Cost and Care](/content/2025/11/glp-1-coverage-2025/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

GLP-1 medications, first developed for type 2 diabetes, have become a major focus in prescription coverage and wellbeing since their approval for weight management in 2021.

According to [Sequoia’s 2025 Wellbeing Trends Report](/content/reports/2025-wellbeing-trends-report/index.html), 26% of companies now cover GLP-1 medications, a figure that jumps to 40% among employers with more than 500 employees. Yet only 14% offer third-party wraparound programs to support behavioral change alongside medication, a gap that raises questions about outcomes and ROI.

At the 2025 Grove Conference, a panel of experts explored how employers are approaching [GLP-1 coverage](/content/2025/11/employer-questions-about-glp-1/index.html), from pharmacy strategy to clinical integration and behavioral support. The discussion, moderated by **Shannon Arens**, Sequoia’s director of wellbeing, featured:

- **Deborah Hanus**, CEO & co-founder, Sparrow
- **Stan Scott**, VP of care navigation & GLP-1 management, Rightway
- **Adele Feng**, director of clinical operations, Found
- **Nelsie Nelson**, pharmacy director, Sequoia

Keep reading for the key takeaways or watch a recording of the session below.

[iframe](https://player.vimeo.com/video/1130022700?badge=0&autopause=0&player_id=0&app_id=58479)

## Employer Perspective

Sparrow’s approach to health and wellness starts with employee feedback and rigorous data analysis. Hanus shared how her partnership with the head of people ensures every decision is grounded in both the business case and employee needs. Engagement surveys and annual benefits surveys help Sparrow understand what’s working, and what’s not, while driving for participation rates above 95% through leadership support and creative incentives.

“It really goes back to consistently talking to employees and getting good data,” Hanus said. “If you have access to that, it’s usually obvious whether the plan is meeting their needs.”

By setting clear expectations and communicating budget constraints, Sparrow aims to support as many employees as possible within available resources, without losing sight of wellbeing goals.

## Pharmacy Spend and Coverage Strategies

Pharmacy benefits account for about 30% of total healthcare spend, and GLP-1s are a growing driver.

To manage costs, Nelson recommends understanding the levers available to you. Fully insured employers should work with carriers on formulary and utilization management options like prior authorization, step therapy, quantity limits, and BMI thresholds. Many carriers also offer weight management programs that pair medication with coaching and nutrition support.

Self-funded employers have more flexibility, including PBM partnerships and third-party programs, but that comes with greater responsibility, such as added costs and administrative work. “As you consider your options, weigh cost impact and employee experience,” Nelson said.

## The Role of Pharmacy Benefit Managers

Scott emphasized that adherence is a major challenge. “One of the big challenges is that people stop and start the use of these drugs,” he said, citing a study showing [only 14% of GLP-1 users remain on therapy](https://www.primetherapeutics.com/w/prime-therapeutics-leading-research-shows-only-1-in-12-remain-on-a-glp-1-drug-for-obesity-at-three-years) after three years.

[Pharmacy benefit managers](/content/2025/05/how-to-choose-the-optimal-pharmacy-benefit-partner/index.html) (PBMs) can help by setting stricter criteria, refill limits, and dollar caps, while also supporting members with pharmacist-led guidance. “As a PBM, we have a responsibility to make sure the right people are getting these drugs and that they are adhering,” Scott said.

## Wraparound Programs

Feng stressed that medication alone isn’t enough.

“It really starts with clinical philosophy,” she said. “Combining medication and lifestyle change helps people lose weight and keep it off.”

Wraparound programs add coaching, nutrition support, and digital tools to improve outcomes and reduce pharmacy spend over time.

“Successful lifestyle change means someone can start to wean off medication usage,” Feng explained. That can lead to lower doses and fewer prescriptions, creating a domino effect of savings across weight-related conditions.

## Measuring ROI: Employer Perspective

ROI falls into two buckets: hard financial value and soft workforce impact, Nelson said.

For hard ROI, there’s strong data on GLP-1s for diabetes, but it’s still early to see definitive returns for weight management.

Soft ROI is about workforce impact and how benefits influence attraction, retention, and engagement.

“We all want to see a healthy, productive workforce, and loyalty over time,” Nelson said. “Is this part of the strategy that could help with that?”

## Measuring ROI: PBM Perspective

Scott noted that employers need visibility into whether their investment is paying off.

“We’re trying to work with our employer clients to give them better insight, and I feel like there’s lots of data blind spots. We see the news articles and we see the hype that these drugs work, and they do, but they don’t work for everyone, and so how do we help employers really kind of sift through all that and understand, am I really getting the bang for my buck?”

He explained that Rightway looks at spend on a quarterly basis and tries to connect it to outcomes.

## Measuring ROI: Wraparound Program Perspective

Feng explained that Found approaches ROI from both hard and soft savings.

“Found is both a core program and a wraparound program,” she said. “When we look at hard dollar savings, the first thing we measure is reduction in branded GLP-1 expenses.”

Branded GLP-1s are costly, so Found leverages a wide medication formulary that includes non-GLP-1 medications and [compounded GLP-1s](/content/2025/08/managing-compounded-glp-1-medications-a-pharmacists-guide-for-employers/index.html), which are more affordable.

She added that pharmacy benefit design also plays a role. “GLP-1s don’t necessarily have to be the first line for everyone,” she said. Flexible program design and step therapy can help reduce spend on expensive branded drugs.

Beyond medication costs, Found evaluates reductions in medical and pharmacy spend for weight-related conditions such as diabetes, sleep apnea, musculoskeletal issues, and even mental health. On the soft savings side, Feng pointed to decreases in absenteeism, fewer workers’ compensation claims, and fewer short-term disability claims. “All of that rolls up into how we look at ROI,” she said.

## Final Takeaways

Employers are weighing affordability against outcomes, exploring pharmacy levers, and considering wraparound programs to make GLP-1 coverage sustainable. While hard ROI data for weight management is still developing, the potential for improved health and workforce engagement is clear. Start by reviewing your data, engaging your carrier or PBM, and educating employees on available resources. Aim for more than offering coverage. Build a long-term strategy that supports your people and your business.

**More From the Grove Conference 2025:**

- [Liquidity in Limbo: How Investor-Backed Companies Can Thrive Amid Uncertainty](/content/2025/12/grove-conference-liquidity-in-limbo/index.html)
- [Growth, Leadership & Technology: Lessons from Alloy and Bilt](/content/2025/12/growth-leadership-technology-alloy-bilt/index.html)

The post [GLP-1 Coverage: Balancing Cost and Care](/content/2025/11/glp-1-coverage-2025/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>IRS Announces 2026 401(k) and 403(b) Contribution Limitshttps://www.sequoia.com/2025/11/irs-announces-2026-401k-and-403b-contribution-limits/

Fri, 21 Nov 2025 19:11:45 +0000https://www.sequoia.com/?p=60722The IRS has released 2026 401(k) and 403(b) contribution limits. Learn what’s changing, why it matters, and what employers need to do to stay compliant.

The post [IRS Announces 2026 401(k) and 403(b) Contribution Limits](/content/2025/11/irs-announces-2026-401k-and-403b-contribution-limits/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

**What’s New for 2026?**

On November 13, the IRS announced updated contribution limits for 401(k) and 403(b) plans. These changes impact elective deferrals, catch-up contributions, and overall plan limits. Here’s a quick summary:

**2026 Retirement Contribution Limits**

|     |     |     |     |
| --- | --- | --- | --- |
| **Plan Limits** | **2026** | **2025** | **Difference** |
| Maximum employee elective deferral (for ages 49 and younger) | $24,500 | $23,500 | $1,000 |
| Employee catch-up contributions (for ages 50-59 and 64 or older) | $8,000 | $7,500 | $500 |
| Maximum employee elective deferral (for ages 50-59 and 64 or older) | $32,500 | $31,000 | $1,500 |
| Employee catch-up contributions (for ages 60-63) | $11,250 | $11,250 | $0 |
| Maximum employee elective deferral (for ages 60-63) | $35,750 | $34,750 | $1,000 |
| Maximum employer + employee limit (for ages 49 or younger) | $72,000 | $70,000 | $2,000 |
| Maximum employer + employee limit (for ages 50-59 and 64 or older) | $80,000 | $77,500 | $2,500 |
| Maximum employer + employee limit (for ages 60-63) | $83,250 | $81,250 | $2,000 |
| Catch-up as Roth for Highly Paid Income (FICA) Limit | $150,000 | $145,000 | $500 |
| Maximum employee compensation limit | $360,000 | $350,000 | $10,000 |
| Highly Compensated Employee Compensation Limitation | $160,000 | $160,000 | $0 |

**Why This Matters**

These changes give employees more room to save for retirement. However, the Roth catch-up requirement for highly paid individuals (those with FICA wages over $150,000) could impact tax planning and payroll processes.

**Employer Next Steps**

To prepare for the 2026 plan year:

- **Update plan materials and employee communications** to reflect new limits and Roth catch-up rules.
- **Verify payroll settings**: Most providers update limits automatically, but employers are responsible for compliance.
- **Plan for Roth catch-up contributions**: Highly paid employees must make catch-up contributions as Roth starting in 2026.
- **Monitor nondiscrimination testing**: Ensure contributions align with IRS limits.

Source: IRS Notice 2025-67 – [https://www.irs.gov/pub/irs-drop/n-25-67.pdf](https://www.irs.gov/pub/irs-drop/n-25-67.pdf)

Advisory services offered by World Investment Advisors, LLC. Securities offered by World Investments, LLC, member FINRA/SIPC. World Investment Advisors, LLC is affiliated through common ownership with World Investments, LLC.

\]\]>New PCORI Fee Announced for Plan Years Ending Before October 1, 2026https://www.sequoia.com/2025/11/new-pcori-fee-announced-for-plan-years-ending-before-october-1-2026/

Tue, 18 Nov 2025 19:33:28 +0000https://www.sequoia.com/?p=60666The IRS recently released Notice 2025-61, setting the Patient-Centered Research Institute (PCORI) fee for plan years ending on or after October 1, 2025 and before October 1, 2026 at $3.84 per covered life. For comparison, the previously announced rate for plan years ending on or after October 1, 2024, and before October 1, 2025, is $3.47 per covered life.

The post [New PCORI Fee Announced for Plan Years Ending Before October 1, 2026](/content/2025/11/new-pcori-fee-announced-for-plan-years-ending-before-october-1-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

The IRS recently released [Notice 2025-61](https://www.irs.gov/irb/2025-45_IRB#NOT-2025-61), setting the Patient-Centered Research Institute (PCORI) fee for plan years ending on or after October 1, 2025 and before October 1, 2026 at **$3.84** per covered life. For comparison, the previously announced rate for plan years ending on or after October 1, 2024, and before October 1, 2025, is $3.47 per covered life.

**Plans Subject to the PCORI Fee**

Employers who sponsored **self-insured group health plans**, including level funded plans and health reimbursement arrangements (HRAs), must pay the PCORI fee by **July 31, 2026**.

**Background**

The annual PCORI fee, created under the Affordable Care Act (ACA), funds research on the effectiveness of medical treatments to help patients, clinicians, and policymakers make informed decisions. Insurance carriers pay the fee for fully insured plans, while employers are responsible for self-insured plans. Originally set to expire in 2019, the fee was extended for 10 years and now applies through 2029.

**PCORI Fee Calculations**

The PCORI fee is determined by the number of covered lives under each self-insured health plan and the applicable rate per covered life, as summarized below:

PCORI Fee = Rate Per Covered Life x # of Covered Lives Under the Self-Insured Plan

Importantly, the applicable rate per covered life is determined by a plan year’s end date and is increased each year depending on the value of national healthcare expenditures. For the next filing due, employers will pay the fee for self-insured plan years ending in 2025, with rates as follows:

|     |     |
| --- | --- |
| **Plan Year End Dates** | **PCORI Fee Rate** |
| January 2025 through September 2025 | $3.47 per covered life |
| October 2025 through December 2025 | $3.84 per covered life |

For more on the PCORI fee, see the [IRS PCORI Fee Q&A](https://www.irs.gov/affordable-care-act/patient-centered-outcomes-research-trust-fund-fee-questions-and-answers).

**Employer Action Items**

1. Employers that only sponsored fully insured plans in 2025 have no action item (insurance carriers are responsible for paying the fee for these plans).
2. Employers that sponsored self-insured plans in 2025 (including **level funded plans** or **HRAs**) should calculate the PCORI fee, report the fee on [IRS Form 720](https://www.irs.gov/forms-pubs/about-form-720), and pay PCORI fees to the IRS by **July 31, 2026**.

Employers that only sponsored fully insured plans in 2025 have no action item (insurance carriers are responsible for paying the fee for these plans).

**Additional Resources**

- [IRS Notice 2025-61](https://www.irs.gov/irb/2025-45_IRB#NOT-2025-61)
- [IRS PCORI Fee Q&A](https://www.irs.gov/affordable-care-act/patient-centered-outcomes-research-trust-fund-fee-questions-and-answers)

[Connect with a Sequoia consultant to](/content/form/consultation/index.html) learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions. And if you’re already a Sequoia client, stay on top of your employer obligations with [your Compliance Checklist](https://admin.sequoia.com/connect?_gl=1*1kg2r29*_gcl_au*ODAwMDI1NDA2LjE3MTkyMzc2MDE.) that highlights important compliance dates, action items, and resources.

\]\]>Travel Risks: Why Employers’ Duty of Care Doesn’t Take Holidayshttps://www.sequoia.com/2025/11/duty-of-care-risk-strategy/

Mon, 17 Nov 2025 17:52:40 +0000https://www.sequoia.com/?p=60650Travel and remote work amplify risk for companies. Discover how to embed duty of care into your risk strategy with practical steps and insurance insights, so your team and company stay protected wherever work takes them.

The post [Travel Risks: Why Employers’ Duty of Care Doesn’t Take Holidays](/content/2025/11/duty-of-care-risk-strategy/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

As the holiday approaches, it seems like everyone is on the move. People jet off to end-of-year conferences, take advantage of remote-work flexibility for sunnier time zones, or visit family abroad. For companies, every trip introduces a new layer of risk.

I was reminded of this recently on a work trip to Singapore — one of two dozen trips this year — when I found myself 10,000 miles from home. When employees are far from their usual support systems, the risks feel bigger. Companies have a responsibility to be ready.

Whether an employee experiences a medical emergency abroad, a natural disaster affects a company-sponsored event, or someone falls victim to a cybersecurity breach while working remotely, the company’s response hinges on one concept: duty of care.

## What Is Duty of Care

Duty of care is a company’s legal and ethical obligation to protect the health, safety, and well-being of its people, no matter where they are.

While risk and HR often own operational pieces, duty of care extends across an entire organization. It encompasses travel guidelines, emergency protocols, benefits, insurance coverage, vendor selection, cyber security, and even security and badge procedures in offices.

## Why the Holiday Season Amplifies Risk

The holiday season compounds [risk exposure](/content/2025/08/risk-management-is-a-story-worth-telling/index.html) in ways companies often underestimate. Here are some dynamics risk leaders should keep top of mind:

### More travel, more variability

More employees find themselves in unfamiliar environments with varying medical, safety, and infrastructure standards. They could deal with foreign healthcare systems, different legal frameworks, and locations they don’t know well.

### Blended trips

Personal travel tacked onto business trips muddies coverage and liability. For example: Is someone covered by company insurance still covered when they extend a business trip for a family vacation?

### Remote work goes global

Working abroad can introduce new cyber security risks and create challenges for emergency response. Even domestic remote work introduces complications. And in both scenarios, similar liability questions emerge: Who is responsible if an employee is injured while working remotely, say, from an in-law’s home?

## Common Duty of Care Blind Spots

Even mature organizations struggle with duty of care gaps. Here are areas that often fall through the cracks:

- **Conferences and large-scale events**

Hosting a conference or major event carries significant risk if you don’t have a crisis playbook outlining how to manage potential emergencies.
- **Remote and hybrid arrangements**

Are employees truly covered by insurance while working in another country? Many assume so — and many are wrong.
- **Contract and gig workers**

These workers are often excluded from safety protocols, creating ethical and legal gaps.
- **Third-party risks**

Travel agencies, event planners, and other vendors must be vetted. [Their failures quickly become your failures](/content/2025/10/third-party-liability/index.html).
- **Cyber security abroad**

Are remote workers using secure networks? Do they understand the risks of public Wi-Fi in foreign airports and hotels?
- **Medical access**

Is support available globally, or does your care network stop at the border?

## Is support available globally, or does your care network stop at the border?

Preparedness means integrating duty of care into your broader risk management strategy. Here’s how:

### 1\. Assessment: Know where your people are

Start by identifying where employees are, where they’re headed, and what risks they face. Map travel patterns and remote work locations. Account for upcoming conferences, off-sites, and seasonal travel spikes. You can’t protect people if you don’t know where they are.

### 2\. Scenario Planning: Prepare for the worst

This is where tabletop exercises earn their keep. What would you do if executives traveling to São Paulo faced a medical emergency or political unrest? What steps would you take? Run through cyber security scenarios, too.

These exercises should align with board-level risk narratives and investor expectations. The conversations you have in the conference room prepare you for the calls you hope you’ll never have to make.

### 3\. Preparedness: Build the Infrastructure

Establish emergency protocols and communication plans before you need them. Review insurance coverage for international travel and remote work. Set up a travel platform that helps you track where employees are, so you’re not scrambling during a crisis.

One often-overlooked resource: Encourage employees traveling abroad to [register with the US State Department](https://mytravel.state.gov/s/step). If anything happens in that country while they’re there, the State Department will know they’re present and can provide assistance.

### 4\. Partnerships: You can’t do this alone

Collaborate across HR, legal, risk, and external providers. Engage global assistance partners for medical, security, and logistical support. Many insurance carriers work with organizations like International SOS that provide vetted vendors and resources. Your [insurance broker](/content/risk/index.html) should help you connect the dots and identify the right partners.

## Insurance Policies That Help Mitigate Duty of Care Risks

You can’t fulfill your duty of care obligations without insurance. Here are key policies that support risk mitigation:

- **Business Travel Accident (BTA) Insurance**

Covers employees traveling on company business, including emergency medical evacuation, accidental death, and repatriation. Some policies extend to blended personal/business travel if properly disclosed.
- **Foreign Voluntary Workers’ Compensation**

Provides coverage for employees injured while working abroad, including medical expenses and lost wages. This coverage is essential for companies with international operations or remote workers overseas.
- **Kidnap & Ransom (K&R) Insurance** Relevant for high-risk travel regions, this covers ransom payments, crisis response, and legal fees. And it often includes access to specialized security consultants.
- **Cyber Liability Insurance** [Protects against data breaches and cyber incidents](/content/2025/09/cyber-liability-risk/index.html). It’s especially critical when employees work remotely using unsecured networks. It may include coverage for regulatory fines and forensic investigation.
- **Emergency Assistance Services (often bundled with travel insurance)**

Includes 24/7 access to medical, legal, and security support. It can be a lifeline during international emergencies.
- **Group Health Plans with Global Coverage**

Ensures employees have access to mental health and medical care regardless of location. Some plans offer telehealth services and international provider networks.
- **General Liability and Umbrella Policies**

Provide broader protection for incidents involving third parties, such as injuries at company-sponsored events or vendor-related exposures.

Work with your broker and insurers to tailor coverage to your workforce’s actual mobility patterns. And here’s the step many companies skip: communicate clearly with employees about what is covered and what isn’t. Post resources on your travel booking site if it’s centralized and include information in the employee handbook.

Make sure to review your coverage annually and align it with your travel policies and risk assessments.

## Executive Buy-In: Why the C-Suite Should Care

When something goes wrong on the road, the financial, operational, and cultural ripple effects land squarely in the executive suite. That’s why every member of the C-suite has a specific stake in duty of care.

- **CFOs** need to understand the financial exposure tied to travel incidents and insurance gaps. One uncovered emergency can cost hundreds of thousands of dollars. And that’s before you factor in potential litigation.
- **COOs** must ensure operational resilience across geographies. If key team members are stranded or injured, can your operations continue?
- **CEOs** are accountable to investors and the public for how the company treats its people. A robust duty of care program is a talent differentiator, especially in industries where top talent expects global mobility and support.

## The Promise We Need to Keep

Duty of care is a year-round commitment to protect your people wherever work takes them. Companies that embed this promise into their risk strategy not only reduce exposure—they build trust, resilience, and a reputation for doing right by their teams.

## Ready to Strengthen Your Duty of Care?

Don’t wait for a crisis to expose the gaps. If you’re unsure where to begin, learn more about [how Sequoia can help you manage business risk](/content/risk/index.html) or connect with a Sequoia [risk advisor](/content/form/consultation/index.html).

**Related stories:**

- [Cyber Liability Risk in the Age of AI: Smarter Tools, Higher Stakes](/content/2025/09/cyber-liability-risk/index.html)
- [Risk Management Is a Story Worth Telling](/content/2025/08/risk-management-is-a-story-worth-telling/index.html)
- [Are You Really Covered? Why General Liability Isn’t Enough for Third-Party Risk](/content/2025/10/third-party-liability/index.html)

\]\]>Covering GLP-1 Drugs: Employers’ Top Questions Answeredhttps://www.sequoia.com/2025/11/employer-questions-about-glp-1/

Wed, 12 Nov 2025 18:45:41 +0000https://www.sequoia.com/?p=60474Have questions about covering GLP-1 drugs for your employees? Learn about costs, ROI, and support programs with Sequoia’s pharmacy and wellbeing experts.

The post [Covering GLP-1 Drugs: Employers’ Top Questions Answered](/content/2025/11/employer-questions-about-glp-1/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

There are good reasons why GLP-1 medications have become one of the most talked about topics in pharmacy benefits. Originally introduced in 2005 to treat diabetes, these drugs gained attention in 2021 when they were approved for weight loss. Since then, demand has skyrocketed, creating shortages for brand-name versions like Ozempic and Wegovy.

With this demand come concerns about affordability. In fact, the [Business Group on Health](https://www.businessgrouphealth.org/topics/blog/high-cost-drugs-create-accessibility-affordability-challenges) reports that 91% of large employers worry about the long-term cost of GLP-1 drugs for weight management.

And despite the widespread conversations about GLP-1s, many employers still have questions: What do these medications do? How much do they cost? What’s the ROI? And what support programs should be in place?

To help employers get started, we spoke with **Nelsie Nelson**, Sequoia’s director of pharmacy, and **Shannon Arens**, Sequoia’s director of wellbeing. While this Q&A isn’t exhaustive, it’s a helpful starting point and we’ve included links to additional Sequoia resources for those who want to learn more.

## The Basics

### What are GLP-1medications and why have they been in demand in the past few years?

**Nelsie Nelson (NN)**: GLP‑1s are a class of medications that were first introduced in 2005 to help people manage type 2 diabetes. They work by mimicking a natural hormone in the body that helps regulate blood sugar, reduce appetite, and slow digestion. Put simply, these medications help people keep blood sugar steady while feeling fuller longer. Over time, that can lead to meaningful weight loss.

What makes GLP-1s stand out is that they address two major health challenges at once: diabetes and obesity.

Interest really took off in 2021 when the FDA approved semaglutide — better known as Wegovy — for chronic weight management, followed by Zepbound in late 2023. In 2024, the FDA expanded Wegovy’s approval to include reducing the risk of serious heart-related events in adults with obesity or overweight who already have heart disease. That broadened the conversation beyond weight loss.

### Are GLP-1 specialty medications?

**NN**: People often think GLP‑1s are specialty drugs because they’re expensive and come as self-injectables, but they aren’t officially classified that way. Specialty drugs usually require special handling, storage, and distribution through a specialty pharmacy, along with close clinical monitoring. GLP‑1s don’t fit that definition. Most are filled at standard retail or mail-order pharmacies and can be self-administered with minimal support.

Where the confusion comes in is cost. Covering GLP-1s represents a significant investment, with annual gross costs often ranging from $12,000 to $17,000 per person before discounts or rebates. For most employers, that’s a meaningful expense and a key driver of pharmacy spend.

### Are employers who provide health coverage required to cover GLP-1s?

**NN**: Coverage really depends on how the medication is being used. When GLP-1s are prescribed to treat type 2 diabetes, they must be covered because they’re an approved and evidence-based option for diabetes management and are generally considered part of the essential health benefits under the Affordable Care Act.

Coverage for weight management is different. Federal law doesn’t currently require employers to cover medications for weight loss or obesity treatment. That means employers can decide whether to offer coverage for GLP-1s used for weight management.

There are ongoing legal challenges and growing advocacy efforts that could eventually change how obesity medications are classified and covered. We’ll continue to monitor these cases.

### What are compounded GLP‑1s and how do they fit into pharmacy coverage?

**NN**: Compounded GLP-1s are versions of the medication that are mixed by a compounding pharmacy rather than manufactured by the original drug company. In true, limited clinical use cases, they may be used when a patient has a legitimate medical reason that prevents them from taking an FDA-approved product, such as an allergy to an inactive ingredient.

Compounding is an important part of pharmacy practice for certain medical needs, but it’s not the same as producing an FDA-approved medication. Compounded GLP-1s don’t go through the FDA’s review process for safety, quality, or effectiveness. Strength and purity can vary, and there’s no guarantee they contain the same active ingredients or dosage as the original medications.

From a coverage standpoint, compounded GLP-1s are usually not included under plan benefits because they aren’t FDA-approved. If a compounded product is medically necessary, employers should work with their [pharmacy benefit manager](/content/2025/05/how-to-choose-the-optimal-pharmacy-benefit-partner/index.html)(PBM) or carrier to ensure it’s obtained through a licensed compounding pharmacy and dispensed under proper medical oversight.

**Read: [Managing Compounded GLP-1 Medications: A Pharmacist’s Guide for Employers](/content/2025/08/managing-compounded-glp-1-medications-a-pharmacists-guide-for-employers/index.html)**

### What are the risks of GLP-1s for employers?

**NN**: From a pharmacist’s standpoint, the main risks fall into three key areas: clinical safety, long-term sustainability, and cost management.

Clinically, GLP-1s are generally safe when prescribed and monitored properly, but they can cause side effects such as nausea, vomiting, and gastrointestinal discomfort, especially when people first start treatment. Rapid weight loss can sometimes lead to dehydration, gallbladder issues, or nutrient deficiencies if it isn’t supported with good nutrition and hydration. Researchers are also studying potential links to lean muscle and bone loss over time.

There are also risks when people obtain [compounded](/content/2025/08/managing-compounded-glp-1-medications-a-pharmacists-guide-for-employers/index.html) or [non-approved versions](https://www.fda.gov/drugs/postmarket-drug-safety-information-patients-and-providers/fdas-concerns-unapproved-glp-1-drugs-used-weight-loss) of these drugs. Since they aren’t reviewed by the FDA, their strength and purity can vary, and some have been found to contain unapproved ingredients.

From a plan management perspective, the biggest challenge is sustainability. GLP-1s are high-cost medications, and while short-term results are strong, adherence over time tends to drop. A 2024 [Prime Therapeutics](https://www.primetherapeutics.com/w/prime-therapeutics-leading-research-shows-only-1-in-12-remain-on-a-glp-1-drug-for-obesity-at-three-years) and Magellan Rx study found that only about 14% of people remained on GLP-1 therapy such as Wegovy or Zepbound after three years. Once treatment stops, weight often returns unless lifestyle changes are in place.

Another consideration is cost. There are currently no generic or biosimilar versions of these medications, and it may be years before any become available.

### What role do pharmacy benefit managers play in GLP-1 access and pricing?

**NN**: Pharmacy benefit managers, or PBMs, play a major role in how GLP-1s are priced, accessed, and managed within an employer’s health plan. For self-funded employers, the PBM manages the formulary, pricing, and utilization rules in collaboration with the employer, who has flexibility to shape how these medications are covered. For fully insured plans, those decisions are built into the carrier’s plan design and managed through the carrier’s PBM relationship, giving employers less direct control.

PBMs also negotiate rebates with drug manufacturers in exchange for preferred placement on formularies. Those rebates can be substantial for GLP-1s, but the savings don’t always translate directly to lower employer or member costs. For self-funded employers, rebate savings may flow back depending on the PBM contract structure, while fully insured plans usually don’t receive rebates directly. Instead, they’re generally incorporated into the carrier’s overall premium pricing. Employers often have limited visibility into how rebates are calculated or retained, which makes it difficult to understand the true net cost of these drugs.

PBMs also set the utilization controls that help balance access and affordability, such as prior authorization, step therapy, and BMI or diagnosis requirements for weight-management use.

**Read: [How to Choose the Optimal Pharmacy Benefit Partner](/content/2025/05/how-to-choose-the-optimal-pharmacy-benefit-partner/index.html)**

### What options do patients have beyond GLP-1 drugs?

**NN**: Several anti-obesity medications, also known as AOMs, have been approved for chronic weight management and continue to be used successfully. Most of these options are taken orally once or twice daily, which some people find easier than weekly injectable GLP-1s. They are also considerably less expensive, making them a practical alternative for many patients and plan sponsors.

Although these medications don’t typically produce the rapid 15–20% average weight loss seen with GLP-1s, they can still lead to clinically meaningful reductions of about 5–10% of body weight, which can improve blood pressure, blood sugar, and cholesterol levels.

For some individuals, bariatric or metabolic surgery may also be an option, depending on their overall health, related conditions, and previous treatment history.

**Shannon Arens (SA)**: Sustainable weight management depends heavily on behavior, mindset, and daily habits. Programs that combine nutrition coaching, physical activity, and behavioral support help people build lasting routines and maintain results, whether or not they use medication. These programs also address barriers that medication alone can’t solve, such as stress, emotional eating, or lack of support systems.

Offering a range of options, from clinically guided medications to wraparound or preventive wellbeing programs, ensures that employees can access the right level of care for their needs. It also helps manage costs by supporting lower-cost interventions where appropriate while still providing access to medical therapy for those who need it. Employers that integrate both approaches, clinical and behavioral, tend to see the best long-term health outcomes and overall wellbeing improvements.

## Cost and Impact

### What role does pharmacy spending play in healthcare costs?

**NN**: Pharmacy spending makes up a large and growing part of overall healthcare costs. On average, pharmacy accounts for about 25–30% of total healthcare spend, which is significant considering it’s just one component of a health plan.

A big driver of this growth is high-cost medications, especially specialty and brand-name drugs. Specialty drugs represent only about 2% of prescriptions but account for roughly half of total pharmacy spending. With the surge in GLP-1 use, even traditional pharmacy categories are starting to show specialty-level cost trends.

For employers, this is important because pharmacy benefits are often the part of the plan employees use most often. While hospital or surgical claims happen occasionally, prescriptions are filled every month. That steady, recurring spend adds up, and the impact grows when new, high-cost therapies enter the market, or utilization increases.

Working with PBMs or carriers to track data, manage utilization, and applying thoughtful controls can go a long way in keeping spend sustainable. As GLP-1s and other new treatments continue to reshape the market, pharmacy management will remain one of the most effective levers employers have to control overall healthcare costs.

**Read: [GLP-1 Coverage in 2025: Balancing Cost and Care](/content/2025/11/glp-1-coverage-2025/index.html)**

### How does adding GLP-1 coverage for weight loss affect pharmacy spend?

**NN**: When employers add GLP-1 coverage for weight loss, it can create a noticeable increase in pharmacy spend. GLP-1s are already covered for diabetes treatment, but expanding coverage to include weight management introduces a new layer of cost. These medications remain among the most expensive on the market, and demand continues to rise as awareness grows.

On average, adding GLP-1s for weight management can raise total pharmacy costs by about 2–5%, and in some high-utilization groups the increase can reach 10–15%. For many employers, that translates to an additional $10 to $25 per member per month in pharmacy spend. This is a meaningful expense, especially when pharmacy already represents roughly a quarter to a third of total healthcare costs.

To put this in perspective, roughly [42% of US adults meet the clinical definition of obesity](https://www.cdc.gov/obesity/adult-obesity-facts/index.html). In a group of 1,000 covered employees, about 425 may fall into that category, and 5–15% of them could qualify for GLP-1 therapy. Even a few dozen members starting treatment can add several hundred thousand dollars to more than a million dollars a year in new costs, given that these medications typically run $12,000 to $16,000 per person annually.

Because many people stay on these medications long term, overall spending can build quickly. And with no generic or biosimilar versions expected for several years, pricing relief is unlikely in the near future.

### Are GLP-1s a big driver in the surge of health care costs and premiums?

**NN**: GLP-1s are definitely contributing to rising healthcare costs, but they’re one piece of a much larger story. Overall healthcare spending continues to climb due to inflation, higher hospital and provider costs, specialty drugs, and an aging population. Within pharmacy, though, GLP-1s have become one of the most closely watched cost drivers over the past two years.

According to [Segal’s 2025 Health Plan Cost Trend Survey](https://www.segalco.com/consulting-insights/2025-health-plan-cost-trend-survey), overall pharmacy costs are projected to rise 11.4%, and the specialty drug trend is expected to climb even higher at 13.3%. Analysts note that GLP-1 medications are a meaningful contributor to these increases because of their high cost and rapid adoption. For employers, that growth in pharmacy trend translates directly into higher overall plan costs.

When total healthcare expenses rise, those higher costs eventually flow into premiums and employee contributions. GLP-1s aren’t the only reason premiums are increasing, but their visibility and growing utilization make them an important factor in today’s healthcare inflation.

**Read: [How Employers Can Contain GLP-1 Costs in Their Health Plans](/content/2025/04/glp1-costs-strategies/index.html)**

### What are the most common challenges employers face when trying to manage pharmacy costs, especially high-cost therapies like GLP‑1s or specialty medications?

**NN**: The biggest challenges usually come down to what I call the three Ps: price, parity, and pressure.

The first challenge is price. High-cost medications continue to enter the market, and even with rebates and discounts, prices remain substantial. Specialty drugs, gene therapies, and now GLP-1s are all reshaping pharmacy budgets. Employers are seeing higher year-over-year trend increases and have limited control over how those prices are set.

The second challenge is parity. As new drugs and treatment categories emerge, employers are trying to ensure benefits feel fair and consistent. How do you create policies that feel equitable across different health needs without opening the door to unsustainable costs?

And then there’s pressure. Employees see new medications advertised everywhere, especially GLP-1s, and they’re asking for coverage. At the same time, company leaders want to stay competitive by offering modern, in-demand benefits. That creates a real balancing act between meeting employee expectations and keeping the plan sustainable.

Partnering with PBMs, carriers, and advisors who provide clear reporting and strategic guidance can make a meaningful difference in managing both cost and access.

**Read: [How Employers Can Contain GLP-1 Costs in Their Health Plans](/content/2025/04/glp1-costs-strategies/index.html)**

### What levers can employers pull to manage pharmacy spend? How do strategies differ for fully insured versus self-insured employers?

**NN**: The key is knowing which tools are available based on how your health plan is structured.

For fully insured employers, most decisions such as formulary design, utilization management, and rebate structures are handled by the carrier. Employers in these arrangements can’t directly change plan components, but they can influence outcomes by reviewing plan options carefully, asking how drugs like GLP-1s are being managed, and advocating for programs that combine medication coverage with lifestyle or behavioral support. They can also revisit carrier relationships at renewal to compare pricing and ensure programs align with their goals.

For self-funded employers, there’s more flexibility but also more responsibility. These employers can work directly with their pharmacy benefit manager (PBM) to negotiate terms, adjust plan design, and create strategies specific to their population. That might include setting stricter eligibility criteria for GLP-1 coverage, limiting the duration of coverage for weight loss, or aligning pricing with outcomes through partnerships with point-solution vendors.

Across both plan types, employers can manage spend more effectively by reviewing utilization data regularly and identifying trends before they become major cost drivers. For example, tracking how many members are using GLP-1s and whether those members are also enrolled in lifestyle programs can help employers evaluate both cost and value over time.

**Read: [Managing Pharmacy Fiduciary Responsibility](/content/2025/02/managing-pharmacy-fiduciary-responsibility/index.html)**

### How can we measure ROI when it comes to GLP‑1 coverage?

**NN**: Measuring ROI for GLP-1 coverage depends on how you define value. There are really two sides to it: the financial return and the human, or organizational, impact.

On the financial side, GLP-1s used for diabetes have a clearer ROI story. Better blood-sugar control reduces complications, emergency visits, and hospitalizations, which can translate into measurable cost savings. For weight-management use, the data is still developing. Early studies show promising reductions in medical claims and absenteeism, but the long-term results are still being evaluated.

On the organizational side, the ROI is more about workforce health and engagement. Employees who have access to GLP-1 coverage often view it as a sign that their employer cares about their wellbeing. That can strengthen retention, improve satisfaction, and position the company as an employer of choice in a competitive market. Healthier employees are often more engaged and productive, which adds value beyond direct medical savings.

Employers can start measuring ROI by setting clear goals for what they want the program to achieve. That might include tracking utilization and adherence, comparing weight-loss outcomes across programs, or looking at changes in health-risk factors such as blood pressure, cholesterol, or blood sugar.

Over time, connecting those data points back to absenteeism, engagement, or productivity helps build a more complete picture of value.

## Holistic Weight Loss Support

### How do third-party or wraparound programs support GLP-1 use?

**SA**: These programs help employees succeed with weight loss and maintain it long term. GLP‑1s can be effective, but without lifestyle changes, most people regain weight once they stop taking the drug. Wraparound programs pair the medication with coaching, nutrition guidance, and physical activity plans. Some even account for individual factors like joint pain or other health conditions. They also address mental health, which often plays a big role in weight management.

Another benefit is clinical oversight. Many primary care providers don’t specialize in obesity medicine, so prescriptions can feel like a check-the-box approach. Wraparound programs ensure the right medication is prescribed, side effects are managed, and tapering happens safely when it’s time to stop.

Ultimately, these programs help employees build habits that stick, so the results last beyond the medication. But despite all these benefits, Sequoia’s Wellbeing Trends Report showed that [only 14% of companies offer a third-party support program](/content/resources/insights-reports/2025-wellbeing-trends-report/index.html).

### How should companies think about prevention when it comes to weight loss?

**SA**: GLP‑1 medications can’t exist in a silo. If employers cover these drugs and do nothing else, they’re setting people up for potential failure and undermining the return on a very large investment.

Prevention has to be part of the strategy. Yes, some employees need medication for conditions like diabetes or obesity, but employers can make a bigger impact by also investing in programs that help people live healthy, active lives before they need costly interventions. [Obesity alone costs the economy billions every year](https://pmc.ncbi.nlm.nih.gov/articles/PMC3047996/) through medical expenses, absenteeism, disability, and even workers’ comp. It also raises the risk of heart disease, Type 2 diabetes, and other chronic conditions.

Prioritizing prevention can reduce those costs over time and create a healthier, more productive workforce. It’s about building a benefits strategy that supports long-term well-being, not just short-term fixes.

## Looking Ahead

### What’s next for GLP-1 coverage?

**NN**: We’re only at the beginning of what’s possible with GLP-1 therapies. The science is advancing quickly, and the pipeline is full of new medications that target multiple hormone pathways and metabolic conditions. Beyond that, new combination therapies that build on the GLP-1 mechanism are in late-stage trials and showing even greater potential for metabolic health improvement. These innovations will keep this category evolving for years to come.

From a coverage standpoint, employers and health plans are moving toward more strategic, outcomes-focused approaches. We’ll likely see greater emphasis on measuring outcomes, using data-driven utilization management, and integrating medication with lifestyle and behavioral support. Also, affordability will remain a challenge until lower-cost competitors or biosimilars enter the market.

Overall, I’m optimistic. As these therapies expand into new disease areas and become easier to use, we’ll keep learning, adapting, and refining coverage strategies to balance access, cost, and outcomes.

**SA**: GLP-1s for weight loss are still relatively new to the market, and the conversation around them is just beginning to take shape. From an employee wellbeing standpoint, I see this evolving similarly to how we’ve seen stigma break down around fertility challenges and mental health. Over the past few years, open dialogue has helped normalize these topics, making it easier for employees to seek care and for employers to offer meaningful support. I believe weight management is on a similar trajectory.

As the public conversation around weight loss becomes more prominent, we’ll see more employees feeling comfortable discussing their challenges. That openness will drive demand for benefits that treat the whole person — not just those who are prescribed GLP-1s.

## More Resources on GLP-1 and Pharmacy Strategy

- [2025 Wellbeing Trends Report](/content/resources/insights-reports/2025-wellbeing-trends-report/index.html)
- [GLP-1 Coverage in 2025: Balancing Cost and Care](/content/2025/11/glp-1-coverage-2025/index.html)
- [Managing Compounded GLP-1 Medications: A Pharmacist’s Guide for Employers](/content/2025/08/managing-compounded-glp-1-medications-a-pharmacists-guide-for-employers/index.html)
- [How Employers Can Contain GLP-1 Costs in Their Health Plans](/content/2025/04/glp1-costs-strategies/index.html)
- [How to Choose the Optimal Pharmacy Benefit Partner](/content/2025/05/how-to-choose-the-optimal-pharmacy-benefit-partner/index.html)
- [Managing Pharmacy Fiduciary Responsibility](/content/2025/02/managing-pharmacy-fiduciary-responsibility/index.html)
- [How Biosimilars Can Significantly Reduce Pharmacy Costs for Employers](/content/2024/12/how-biosimilars-can-significantly-reduce-pharmacy-costs-for-employers/index.html)

\]\]>How to Manage Wage Pressure During the Merit Cyclehttps://www.sequoia.com/2025/11/how-manage-wage-pressure-during-merit-cycle/

Mon, 10 Nov 2025 20:01:22 +0000https://www.sequoia.com/?p=60459Learn strategies to manage wage pressure during merit season with transparency, empathy, and clear communication about compensation decisions.

The post [How to Manage Wage Pressure During the Merit Cycle](/content/2025/11/how-manage-wage-pressure-during-merit-cycle/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

The holiday season brings plenty of festive cheer, but it also comes with financial pressure. This year, people feel even more squeezed by inflation and rising costs. According to [Bankrate’s](https://www.bankrate.com/credit-cards/news/holiday-spending-report/) Holiday Spending Report, 41% of people say they’re worried that holiday gifts will cost more this year. Nearly half of shoppers started their holiday shopping before the end of October, a clean sign that financial stress is high.

When the economy feels shaky and personal budgets tighten, many employees look to their employers for relief — often expecting pay to rise with the cost of living.

“When employees feel a lot of inflationary pressure, they think that should translate to larger raises,” said Christina Byrd, senior compensation advisor at Sequoia. “But that’s very different from how companies think about raises.”

So what can employers do when expectations for bigger raises and merit awards don’t align with a company’s budget or compensation strategy? The answer lies in stronger communication.

## The Disconnect: Cost of Living vs. Cost of Labor

Companies that follow a traditional January–December fiscal year are usually deep in budgeting for the next year during the fourth quarter — right in the middle of the holiday season. Holiday spending, however, isn’t factored into compensation planning.

“There are two pieces of this pie: what employees expect and how companies actually structure compensation,” Byrd said. “Employees think about the cost of living because that’s what they feel at the supermarket. Companies think about cost of labor because that’s what drives competitiveness.”

Here’s the distinction:

- **Cost of labor** is what employers pay to hire and retain talent based on supply and demand in the job market.
- **Cost of living** is how much money individuals need to cover basic expenses like housing, food, and taxes.

## 5 Ways to Manage Wage Pressure with Transparency

When employees start to question why their raise doesn’t match inflation, transparency is the best tool.

“It’s important to communicate that ‘We understand you’re experiencing inflation, and as a company, we are too. But that’s not how we establish compensation.’” Byrd recommended.

Here are a few ways to help employees understand how your company makes pay decisions:

### 1\. Reinforce your compensation philosophy

A [compensation philosophy](/content/2024/10/compensation-philosophy-strategy/index.html) is the formal statement about how a company pays and rewards its employees.

“Pointing back to their comp philosophy is how I’ve seen most companies address these questions,” Byrd said. “They explain how they benchmark compensation against peers based on industry and size and make pay decisions based on market data.”

Employers should also explain how factors like geography, job level, and performance affect compensation.

### 2\. Train managers for compensation conversations

Managers are the ones who share comp and merit award information with employees — and field the tough questions. Equip them with talking points, FAQs, and clear explanations of your compensation process so they can respond confidently and consistently.

### 3\. Remind employees about the value of their total rewards

Help employees see beyond base pay. Reinforce the value of your total rewards package, including [health benefits](/content/2025/10/open-enrollment-strategy-2025/index.html), 401(k) matches, equity, wellness stipends, and more.

“Offer a holistic view of their compensation,” Byrd said. “When people understand the full picture, they can see the real investment the company is making in them.”

### 4\. Talk about future growth

Direct conversations toward what’s next. Job architecture and leveling frameworks help employees understand what’s required to move up. “It’s a really big moment for employees to discuss with their managers their long-term potential at the company,” Byrd said.

### 5\. Get ahead of the conversation

Don’t wait until [merit season](/content/2024/11/merit-cycle-essentials/index.html) is in full swing to explain how pay decisions work. Share key information early, such as at an all-hands meeting or a company-wide update. When employees know what’s coming, it takes the mystery — and stress — out of the process.

## Combine Clarity with Empathy

The right balance of transparency and understanding can make all the difference in keeping employees engaged.

“Companies have precious resources right now,” Byrd said. “It’s more important than ever to be really clear about what your intentions are and what you’re trying to do with those resources.”

That clarity should be paired with empathy, because understanding how employees experience compensation is just as critical as explaining the numbers.

“Employees don’t always know the definitions of comp terms or how compensation works behind the scenes,” Byrd said. “What they do know is how they feel when they’re shopping. It’s important for companies to keep that in mind and have patience and understanding for where employees are coming from.”

## Ready to Strengthen Your Compensation Strategy?

Whether you’re planning your merit cycle or shaping a full compensation strategy, if you’d like expert guidance on building an approach that aligns with your business goals and keeps employees engaged, [connect with a Sequoia advisor](/content/form/consultation/index.html) today.

\]\]>California Legislative Roundup: What’s New for 2026https://www.sequoia.com/2025/11/california-legislative-roundup-whats-new-for-2026/

Thu, 06 Nov 2025 17:09:39 +0000https://www.sequoia.com/?p=60442Recently, California Governor Newsom signed several bills into law that will impact employer compliance obligations regarding paid sick leave, pay transparency, pay data reporting, workplace notices, and paid family leave (PFL). These laws begin to take effect January 1, 2026, unless specified otherwise below and will require employer action before each law commences.

The post [California Legislative Roundup: What’s New for 2026](/content/2025/11/california-legislative-roundup-whats-new-for-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

_February 18, 2026 update: The California Labor Commissioner has developed a [template notice](https://www.dir.ca.gov/dlse/Know-Your-Rights-Notice/Know-Your-Rights-Notice-English.pdf?6gnz2513y6m) to assist employers in complying with SB 294 Workplace Know Your Rights Act._

Recently, California Governor Newsom signed several bills into law that will impact employer compliance obligations regarding paid sick leave, pay transparency, pay data reporting, workplace notices, and paid family leave (PFL). These laws begin to take effect January 1, 2026, unless specified otherwise below and will require employer action before each law commences.

**AB 406: Expanded Paid and Unpaid Sick and Safe Time**

**Existing Law:**

Existing law requires employers to provide employees with accrued paid sick leave under the [California Healthy Workplaces Families Act](https://www.dir.ca.gov/dlse/ab1522.html)(HWFA). In addition, California Government Code section 12945.8 requires employers with 25 or more employees to provide unpaid leave to employees who are victims or whose family members are victims of _Qualifying Acts of Violence_. A qualifying act of violence is defined to include the following, regardless of whether there is an arrest, prosecution, or conviction:

- Domestic violence
- Sexual assault
- Stalking
- Any act, conduct, or pattern of conduct that includes any of the following towards another individual:
  - Causing bodily injury or death
  - Exhibiting, drawing, brandishing, or using a firearm or other dangerous weapon
  - Using or making a reasonably perceived or actual threat to use force to cause physical injury or death

**AB 406 Changes:**

Effective **October 1, 2025**, AB 406 expands California’s [paid sick and safe time law](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260AB406) to cover:

- An employee (including one who is a victim of any crime) who appears in court as a witness to comply with a subpoena or other court order; and
- An employee who serves on an inquest jury or trial jury.

Note that employers were already required to provide job-protected, unpaid leave for the above reasons under California Government Code section 12945.8. AB 406 now requires employers to allow employees to use their accrued paid sick leave for such purposes.

Effective **January 1, 2026**, AB 406 expands both California’s paid sick and safe time under HWFA and job-protected unpaid leave to allow employees to use leave if they or a family member are a victim of _certain_ crimes and are attending judicial proceedings related to that crime. The employee is required to give the employer reasonable advance notice of their intention to take time off unless advance notice is not feasible. When an unscheduled absence occurs, the employer is prohibited from taking action against the employee if the employee provides certification within a reasonable time after the absence.

**SB 642: Pay Disclosures & Pay Equity**

**_Pay Disclosures on Job Postings_**

**Existing Law**: Existing law requires employers with 15 or more employees to include the “pay scale” for a position on any job posting. Existing law defines “pay scale” as the salary or hourly range that the employer reasonably expects to pay for a position.

**SB 642 Changes**: SB 642 amends the definition of “pay scale” to clarify that employers can make a “good faith estimate” of wages they reasonably expect to pay for the position, but that this estimate must be for what will be provided “upon hire,” and not at a future time.

**_Pay Equity Protections_**

**Existing Law**: Existing law prohibits an employer from paying its employees at wage rates less than the rates paid to employees of the opposite sex or of another race or ethnicity for substantially similar work, except under specified circumstances.

**SB 642 Changes**: SB 642 amends existing pay equity requirements to:

- Replace “opposite sex” with “another sex,” to be more inclusive.
- Amends the definition of “wages” and “wage rates” to include all forms of pay, including, but not limited to, salary, overtime pay, bonuses, stock, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits. _Please note that this definition of wages applies to pay equity practices and is not related to job posting requirements._
- Extends the time for an employee to bring a civil action to 3 years from the last date the violation occurred and provides the ability for an employee to obtain relief for up to 6 years.

**SB 464: Pay Data Reporting Requirements**

**Existing law**: Existing law requires employers with 100 or more U.S. employees, and at least 1 California employee, to submit employee demographic and pay data to the Civil Rights Department.

**SB 464 Changes:**

- Effective **January 1, 2026**, if requested by the Civil Rights Department (CRD), courts are required to impose a civil penalty against an employer that fails to file a pay data report (prior to January 1, 2026, penalties were permitted, but not mandatory).
- Beginning **January 1, 2026**, employers must store any demographic information gathered for the purpose of submitting the pay data report separately from employees’ personnel records.
- Beginning **January 1, 2027**, employers will be able to select 23 job categories (up from 10) for employees for purposes of the pay data report.

**SB 617: Cal-WARN’s Notice Obligations**

**Existing Law**: Under the existing California Worker Adjustment and Retraining Act (Cal-WARN), certain covered employers must provide a written notice to all impacted employees, the Employment Development Department, and other local agencies when conducting large reductions in force. A covered employer is an employer with a physical California location with 75 or more full-time and part-time employees at any time in the past 12 months.

**SB 617 Changes:** SB 617 requires Cal-WARN written notices to include the following additional information:

- Whether an employer plans to coordinate services through a local workforce development board or another similar entity. When an employer is not coordinating services with any entity, this must be clearly stated within the written notice.
  - If an employer chooses to coordinate services with a local workforce development board or another entity, the employer must arrange such services within thirty days from the date of the written notice.
- A working email and telephone number for the local workforce development board and for the employer that employees and agencies can use to reach them.
- Required description of the rapid response activities offered by the local workforce development board:
  - “Local Workforce Development Boards and their partners help laid off workers find new jobs. Visit an America’s Job Center of California location near you. You can get help with your resume, practice interviewing, search for jobs and more. You can also learn about training programs to help start a new career.”
- Description of CalFresh, the statewide food assistance program, the CalFresh benefits helpline, and a link to the CalFresh internet website.

**SB 294: Workplace Know Your Rights Act**

SB 294 is a new law that is aimed at informing employees of their constitutional rights amid heightened federal immigration enforcement. SB 294 requires employers to:

- Provide a stand-alone written notice to employees by **February 1, 2026**, annually thereafter, and upon hire. The notice informs employees of specified workers’ rights, including, among other items, their constitutional rights when interacting with law enforcement at the workplace. Employers can use this [template notice](https://www.dir.ca.gov/dlse/Know-Your-Rights-Notice/Know-Your-Rights-Notice-English.pdf?6gnz2513y6m) posted by the Labor Commissioner.
- By **March 30, 2025**, provide current employees, and new employees upon hire, the opportunity to designate an emergency contact. If authorized by the employee, employers must notify this emergency contact if the employee is detained or arrested at their worksite. If the employee is away from the worksite in the performance of job duties, the employer must notify the emergency contact only if the employer has actual knowledge of the arrest or detention of the employee.

Employers may be subject to a civil penalty of up to $500 per employee, per violation and civil action (where injunctive relief, punitive damages, and reasonable attorney’s fees can be ordered).

**SB 590: Paid Family Leave**

**Existing Law**: Existing law provides up to eight weeks of partial wage replacement for eligible employees to take time off to care for a seriously ill family member, bond with a new child or assist with a qualifying military exigency.

**SB 590 Changes**: Starting **July 1, 2028**, SB 590 will expand the above definition of a “family member” that will now include a designated person. A designated person is defined as any blood relative or individual who is the equivalent of family.

When requesting PFL benefits from the CA Employment Development Department to care for a designated person, employees must complete the following steps:

- Identify the designated person at the time of their first claim for such benefits.
- Attest under penalty of perjury how the relationship is either blood-related or equivalent to a family relationship.

**Employer Next Steps**

California’s latest legislative amendments bring a range of compliance updates that require timely employer action. With some changes starting as early as January 1, 2026, employers should begin reviewing policies, updating job postings, revising notice procedures, and preparing for expanded reporting requirements.

**Additional Resources**

- [California Healthy Workplaces Families Act](https://www.dir.ca.gov/dlse/ab1522.html)
- [California Assembly Bill (AB) 406](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260AB406)
- [California Senate Bill (SB) 642](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB642)
- [California Senate Bill (SB) 464](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB464)
- [California Senate Bill (SB) 617](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB617)
- [California Senate Bill (SB) 294](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB294)
- [California Senate Bill (SB) 590](https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB590)

\]\]>Changes to Delaware Paid Family Leave Starting January 1, 2026https://www.sequoia.com/2025/11/changes-to-delaware-paid-family-leave-starting-january-1-2026/

Mon, 03 Nov 2025 16:14:30 +0000https://www.sequoia.com/?p=60411Delaware Lawmakers passed a law over the summer that revised Delaware’s Paid Family and Medical leave Program just in time for employees to start receiving benefits on January 1, 2026.

The post [Changes to Delaware Paid Family Leave Starting January 1, 2026](/content/2025/11/changes-to-delaware-paid-family-leave-starting-january-1-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Delaware Lawmakers passed a law over the summer that revised Delaware’s Paid Family and Medical leave Program just in time for employees to start receiving benefits on January 1, 2026.

**Background**

The [Healthy Delaware Families Act](https://www.jacksonlewis.com/sites/default/files/docs/HealthyDelawareFamiliesActEngrossment.pdf) created a paid family and medical leave benefit (PFML or Program) for eligible residents beginning on January 1, 2026. The program will provide up to 12 weeks of paid leave to bond with a new child, care for a family member’s or one’s own serious health condition, or for qualifying military exigency. The program has been funded by employer and employee contributions, which began on January 1, 2025.

For more information, check out our previous [Sequoia Foreword Blog: Delaware Passes Paid Family and Medical Leave](/content/2024/09/delaware-passes-paid-family-and-medical-leave/index.html).

**Changes from House Bill 128**

On July 30, 2025, the Governor signed [House Bill 128](https://legis.delaware.gov/BillDetail/142589), which impacts employer obligations, employee rights, and compliance requirements.

_Benefits Coordination_

A previous provision of the law, now rescinded, allowed employers to require that employees use accrued paid time off before accessing their paid leave benefits. This new provision specifies that employers cannot require the use of accrued paid time off before receiving benefits from the Program. Although an employer cannot require the use of accrued paid time off, the act does confirm that use of accrued paid time off to supplement or “top off” Delaware Paid Leave benefits requires both the employer and employee to agree to the top off.

In addition, Delaware Paid Leave is the primary payor of benefits. An employer’s disability insurance benefits may be offset by PMFL, according to the terms of the disability policy.

_Private Plans_

Like other states with mandatory paid family medical leave programs, employers may satisfy their obligations to comply with PFML through a private plan. Prior rules required employers interested in a private plan to apply for and renew their plans between September 1st and December 1st of each year. The provisions now require the Delaware Department of Labor to accept applications for approval of an employer’s private plan on a rolling basis with effective dates on the 1st of each quarter (January 1, April 1, July 1, or October 1).

Private plan documentation requirements have also been simplified, as no claim documentation is required unless there is an appeal, complaint, audit, or specific inquiry from the Department. Previously, employers with private plans were required to submit all claim documentation to the Department.

Employers with fewer than 25 employees in Delaware that voluntarily choose to provide employees with a private plan will have rules and regulations applied to their plan as if they are a covered employer by law.

**Employer Action Items**

Employers with employees in Delaware should continue to focus on previous Delaware Paid Family Medical Leave Program requirements as well as these new provisions and should:

- Confirm enrollment in state program or private plan compliance
- Review payroll systems for correct deductions and remittance
- Update leave policies from previous regulations
  - Remove PTO exhaustion requirements and align other benefit rules
- Train managers and supervisors on PFML eligibility, benefit amounts, and concurrency with FMLA
- Prepare for employee claims starting January 1, 2026

**Additional Resources**

- Sequoia Foreword Blog: [Delaware Passes Paid Family and Medical Leave](/content/2024/09/delaware-passes-paid-family-and-medical-leave/index.html)
- [Healthy Delaware Family Act](https://laborfiles.delaware.gov/main/pfl/Healthy_Delaware_Families_Act.pdf)
- [Delaware House Bill 128](https://legis.delaware.gov/BillDetail/142589)

\]\]>Unlock Workforce Clarity: How Sequoia’s Executive Dashboard Empowers HR and CFOs with Unified Datahttps://www.sequoia.com/2025/10/sequoia-executive-dashboard/

Fri, 31 Oct 2025 14:53:46 +0000https://www.sequoia.com/?p=60200Say goodbye to scattered spreadsheets. Sequoia’s Executive Workforce Insights Dashboard brings HR and finance leaders the real-time data they need to drive smarter, faster decisions.

The post [Unlock Workforce Clarity: How Sequoia’s Executive Dashboard Empowers HR and CFOs with Unified Data](/content/2025/10/sequoia-executive-dashboard/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

HR professionals know the feeling: you need a quick answer about headcount growth, turnover, or pay equity, but the data is scattered across different platforms. You spend more time hunting for numbers than acting on them. When your workforce data is fragmented, reporting slows down, compliance gets tricky, and strategic planning can feel like guesswork.

Sequoia’s Executive Workforce Insights Dashboard was built to change that. By centralizing your most important HR metrics, it gives you and your team the clarity you need to make confident, data-driven decisions, without the hassle.

**The Challenge of Disconnected Workforce Data**

Let’s be honest. Juggling multiple dashboards and spreadsheets is exhausting. When HR metrics live in silos, it’s tough to get a true sense of your organization’s health. You might have headcount in one system, compensation in another, and diversity stats buried somewhere else. This fragmentation doesn’t just slow down reporting; it can also create compliance risks and make it harder to spot trends or address issues before they grow.

For example, if you’re trying to benchmark your manager-to-employee ratio or track retention by department, disconnected data means you’re piecing together a puzzle with missing pieces. That lack of visibility can stall decision-making and make it harder to respond quickly to changes, whether it’s a spike in turnover or a need to ramp up hiring in a specific region.

These data silos can lead to missed opportunities and slower responses to business needs. Centralized dashboards aren’t just a nice-to-have; they’re essential for keeping your people strategy agile and compliant.

**Building a Battle Tested Solution**

Over the last 24 years Sequoia’s team has worked closely with HR professionals, CFOs, founders and technology partners. Our advisors have heard it all and we built this dashboard to solve the problems our clients come across most often. The executive team and people analytics teams at Sequoia even got in on the action, providing illuminating feedback on how they used the product. The result? A single platform that brings together all your people, compensation, and benefits data, powered by seamless HRIS integration.

With the Executive Workforce Insights Dashboard, you get real-time access to everything from headcount and turnover to pay transparency and headcount planning. The dashboard’s intuitive visualizations let you drill down into granular details, by department, geography, tenure, and more, so you can answer tough questions fast.

Actionable metrics are front and center. Whether you’re reviewing diversity stats or analyzing retention risks, the dashboard makes it easy to slice and dice your data, spot patterns, and share insights with stakeholders. It’s not just about seeing the numbers, it’s about understanding what they mean for your people strategy.

**Features That Drive Results**

Here’s what you can expect when you start using the Executive Workforce Insights Dashboard:

- **Headcount and Growth**: Track your total employees, including full-time, part-time, temporary, and contract workers. Monitor headcount changes over time and compare growth against industry benchmarks to support operational and financial planning.
- **Turnover and Retention**: Analyze turnover rates by tenure, department, and location. Spot retention risks early and use insights to improve culture or management practices.
- **Manager-to-Employee Ratio**: Keep an eye on team structures to ensure managers aren’t overloaded and employees get the support they need.
- **Diversity and Inclusion Visualization**: See demographic representation and benchmark pay equity. Identify gaps and strategize improvements to build a more inclusive workplace.
- **Total Comp & Benefits Investment**: Understand how your investment in compensation, benefits, and training is distributed across your workforce. Use demographic breakdowns to guide competitive pay and benefits strategies.

You can drill down to employee-level details, slice data by multiple dimensions, and visualize trends over time, all in one place.

**Early Impact and Our Commitment**

HR teams using the dashboard have already noticed faster, more accurate reporting. Leaders have shared that improved visibility has led to better, quicker decisions and more strategic HR initiatives.

As Bob Lawson, President and CEO of Sequoia put it at our latest Grove event, “We work with people driven companies… it all starts with our expertise and our advisory capability and then the platform which enables you to get the most out of what we do.”

Sequoia is committed to helping you bring clarity and confidence to your people strategy. The Executive Workforce Insights Dashboard isn’t just a tool, it’s your partner in building a healthier, more engaged workforce. If you’re ready to streamline your reporting and unlock deeper insights, reach out to your Sequoia team to get started.

**Ready to see your workforce in a whole new light? Let’s make your data work for you with [Sequoia OS](/content/solutions/platform/index.html).**

\]\]>AI’s Impact on Compensation Plans in 2026: What Investor-Backed Companies Need to Knowhttps://www.sequoia.com/2025/10/ai-compensation-plan/

Thu, 30 Oct 2025 14:49:51 +0000https://www.sequoia.com/?p=60198Learn why founders, CFOs, and CHROs must blend technology with human judgment to stay competitive when creating their compensation plans.

The post [AI’s Impact on Compensation Plans in 2026: What Investor-Backed Companies Need to Know](/content/2025/10/ai-compensation-plan/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

If you’re responsible for shaping your company’s compensation and benefits strategy, you’re already feeling the pressure to make smarter, faster decisions to ensure strong retention and an engaging employee experience. You’re under pressure to optimize budgets and justify every dollar while retaining and investing in top talent. And you’ve been asked to figure out how more AI, not more people, can help.

Starting this year, AI has fundamentally changed how compensation decisions are made, scrutinized, and communicated. Employees have higher expectations around clear communication, consistency of decision-making, and personalized insights into their growth and pay trajectory. Executives must make data-driven, well-informed decisions and be prepared to explain those decisions with clarity and precision.

Let’s get candid about what’s happening, what’s next, and how you can lead your merit and compensation plan cycles with confidence.

## The Right Mix of Data-Driven Insights and Human Critical Thinking

Data driven insights have always been the language of strong leadership. Now, with AI, data-driven insights are an expected universal standard. Gone are the days of relying solely on spreadsheets. And using AI can automate the more administrative aspects of merit and compensation cycles, like generating merit letters. According to a recent survey by General Assembly, 82% of HR professionals use AI daily.

However, there are some things AI just can’t do when it comes to your compensation plan. AI can create charts and graphs that help you in the board room, but it doesn’t understand team dynamics, deliver sensitive feedback, or align decisions with company values or strategic priorities.

For accountability, impact, and to drive a narrative both to executives and employees, the next merit cycle is a true combination of technology and the human touch.

For example, companies using Sequoia’s integrated [platform](/content/solutions/platform/index.html) can see how changes in total comp and benefits affect both individual and team outcomes in real time. But, it’s the human compensation consultants at Sequoia who provide hands-on guidance, helping clients build strategic plans that scale and navigate any bumps in the road.

## What This Means for 2026 Compensation and Merit Planning

1. **Audit your [merit planning process](/content/2024/11/merit-cycle-essentials/index.html)**: Take a critical eye to the data and talk to a Sequoia advisor about how to set up your organization for the future. AI will save you time and streamline processes so you can do the human work of ensuring alignment with business strategy and leadership goals.
2. **Prepare for new pay transparency regulations**: At [Gartner’s HR Symposium in London](https://diginomica.com/gartner-hr-symposium-london-three-ways-employers-will-deploy-ai-will-change-nature-work), the research and advisory firm predicted that by 2032 at least 30% of the world’s largest economies will be watching and regulating the ratio of human to AI. As you think about your people strategy, develop your company’s point of view on AI’s role in your organization and in your merit decisions; you may be reporting on it in the future.
3. **Upskill compensation teams**: Training your team on AI skills goes beyond prompt writing. Using AI as a founder or compensation leader means being able to understand AI bias, see anomalies and trends in the data, and ask the right questions. According to a Gartner survey, only 8% of HR leaders say their teams have the right AI skills. As you train AI models to help with merit and comp planning, also train your team to use AI without losing their human advantage or pick an [outsourcing](/content/solutions/outsourcing/index.html) partner who you trust.

## Creating Resilience

Using AI in compensation planning doesn’t make the process less human or less strategic. Technology, including AI, should enhance the process with faster data analysis, more accurate modeling based on real-time data, and produce much deeper insights.

AI gives people teams time and space to focus on the strategic and human elements that matter most: aligning pay with purpose, communicating value, and making equitable, forward-thinking decisions. When used thoughtfully, AI becomes a tool that amplifies judgment, empathy, and strategy, making companies more resilient in the long run.

## Get Expert Comp Planning Support for Your Next Merit Cycle

AI is changing compensation planning, but it’s not replacing the need for strategic, human guidance. Our advisors can help you build a plan that’s data-informed, people-first, and ready for what’s next. [Connect with a Sequoia advisor to learn more](/content/form/consultation/index.html).

**Related:**

- [Merit Cycle Essentials: How To Drive Business Goals While Engaging Employees](/content/2024/11/merit-cycle-essentials/index.html)
- [Is Computer Science the New Liberal Arts Degree](/content/2025/07/ai-and-engineering-jobs/index.html)
- [AI, Healthcare, and the Office Comeback: Rethinking People Spend in 2025](/content/2025/09/rethinking-people-spend-2025/index.html)

\]\]>Departments Release FAQs about Affordable Care Act Implementation Part 72: New Flexibility for Fertility Benefitshttps://www.sequoia.com/2025/10/departments-release-faqs-about-affordable-care-act-implementation-part-72-new-flexibility-for-fertility-benefits/

Wed, 29 Oct 2025 13:49:47 +0000https://www.sequoia.com/?p=60194On October 16, 2025, the Departments of Labor, Health and Human Services, and Treasury (jointly Departments) issued ACA FAQs Part 72, clarifying how employers can offer fertility benefits as excepted benefits under federal law. This guidance provides new flexibility to meet growing employee demand for family building support while maintaining compliance with federal health plan rules.

The post [Departments Release FAQs about Affordable Care Act Implementation Part 72: New Flexibility for Fertility Benefits](/content/2025/10/departments-release-faqs-about-affordable-care-act-implementation-part-72-new-flexibility-for-fertility-benefits/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

On October 16, 2025, the Departments of Labor, Health and Human Services, and Treasury (jointly Departments) issued ACA [FAQs Part 72](https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-72), clarifying how employers can offer fertility benefits as excepted benefits under federal law. This guidance provides new flexibility to meet growing employee demand for family building support while maintaining compliance with federal health plan rules.

This guidance is especially relevant for employers seeking to expand fertility offerings without triggering Affordable Care Act (ACA) mandates such as preventive services coverage, annual and lifetime dollar limits, and PCORI fees. The guidance outlines compliant pathways for structuring fertility benefits outside of traditional group health plans.

**Background**

In general, excepted benefits are types of coverage that are not subject to ACA market reform rules. They fall into four categories: benefits excepted in all circumstances (e.g., onsite clinics and workers’ compensation), limited scope benefits (e.g., vision or dental coverage), non-coordinated excepted benefits (e.g., specified disease or hospital indemnity policies), and supplemental benefits (e.g., coverage that supplements Medicare or Tricare).

Historically, offering stand-alone fertility benefits has been challenging due to ACA compliance rules. A health reimbursement arrangement (HRA) that reimburses medical expenses must be integrated with a group health plan to avoid violating ACA requirements. HRAs are employer funded, account based plans that require formal documentation and administration. Many employers have used specialty HRAs to support high cost, under covered services such as fertility treatments, gender-affirming care, abortion or medical travel. These HRAs must be carefully designed to avoid disqualifying employees from contributing to health savings accounts (HSAs), typically by reimbursing expenses only after the employee meets their high-deductible health plan threshold (often referred to as a post-deductible HRA).

**FAQs Part 72**

**Fertility Benefits May Qualify as Independent Excepted Benefits**

ACA FAQs Part 72 confirm that fully insured fertility coverage may qualify as an independent, non-coordinated excepted benefit under existing federal law. Specifically, this type of coverage falls under the definition of excepted benefits and allows for coverage limited to a specified disease or illness, such as cancer only policies or hospital indemnity insurance policies.

To meet the criteria for a non-coordinated excepted benefit, the fertility coverage must be fully insured, offered separately from the employer’s group health plan, and not conditioned on enrollment in that plan. This structure enables employers to offer fertility benefits independently, without subjecting the coverage to ACA market reform requirements or disqualifying employees from contributing to a Health Savings Account (HSA).

While this clarification opens the door for a new benefit design strategy, it is important to note that availability of fully insured, stand-alone fertility products is currently limited. Most state insurance markets do not yet offer such products, and it remains to be seen whether carriers will develop compliant offerings in response to this guidance.

**Excepted-Benefit HRAs Can Reimburse Fertility Expenses**

Employers that offer a group health plan may use an Excepted Benefit Health Reimbursement Arrangement (EBHRA) to reimburse certain fertility related expenses. While EBHRAs have been available for several years, ACA FAQs Part 72 reinforces that they remain a valid and compliant option for supporting fertility care. To qualify, the employer must make a traditional group health plan available, although employees are not required to enroll in that plan to participate in the EBHRA. EBHRAs can reimburse expenses such as fertility medications, IVF, or egg retrieval procedures, subject to the annual EBHRA limit (approximately $2,150 for 2025). This structure allows employers to offer predictable, capped support for fertility expenses without modifying their core medical plan or compromising HSA eligibility.

**Specialty HRAs vs. EBHRAs: Key differences and Strategic Considerations**

ACA FAQs Part 72 did not change the rules governing EBHRAs, but it has prompted renewed attention to how employers can leverage different HRA structures to support fertility benefits. Employers may be wondering – _what is new and why choose one approach over another?_

Traditionally, specialty HRAs have been the primary vehicle for reimbursing infertility-related expenses. These HRAs are integrated with the employer’s group health plan and can be designed to cover high-cost services such as IVF, egg retrieval, or fertility medications. Because specialty HRAs are not subject to the EBHRA annual dollar cap, they allow for more generous reimbursement levels. However, they come with more complex compliance requirements, including formal plan documentation and careful coordination with HSA eligibility rules.

EBHRAs, on the other hand, are capped at a lower annual limit (approximately $2,150 for 2025) and are designed to provide modest support for employees who were offered, but may not be enrolled in, the employer’s group health plan. This includes part-time workers, employees covered under a spouse’s plan, or those who opt out of the employer’s coverage. EBHRAs are more simple to administer and do not interfere with HSA eligibility, making them another option for employers seeking broader accessibility and predictable cost control.

Ultimately, the choice between an EBHRA and a specialty HRA depends on the employers’ goals. EBHRAs may be ideal for employers prioritizing reach and affordability, while specialty HRAs are best suited for employers wanting to offer robust, targeted support for fertility and other high-cost health needs.

**EAPs Can Include Limited Fertility Support**

ACA FAQs Part 72 reaffirms that Employee Assistance Programs (EAPs) may continue to qualify as excepted benefits, provided they do not offer “significant medical benefits.” While the Departments did not define “significant benefits,” longstanding guidance suggests that coverage of medical treatments, such as fertility drugs or procedures, would likely exceed this threshold and disqualify the EAP from excepted benefit status. Employers can still leverage EAPs to provide meaningful, non-clinical fertility support without jeopardizing their compliance status. This may include offering educational resources or navigation support to help employees understand fertility treatment options, locate providers, or explore family building pathways (e.g., access to webinars or printed materials). For employers seeking to gauge employee interest or provide initial support before introducing a full benefit, an EAP based model can serve as an appropriate starting point.

**Employer Takeaways**

ACA FAQs Part 72 provides employers with expanded flexibility to support fertility care while remaining compliant with federal health plan regulations. Although the guidance does not introduce new rules, it clarifies existing pathways for offering fertility benefits outside of the primary group health plan. Employers should assess their current benefit structure, consult carriers and vendors about insured options, and ensure plan documents and employee communications reflect any new offerings. Whether through insured excepted benefit policies, EBHRAs, or supportive EAP enhancements, employers now have more options to meet employee needs while managing compliance requirements.

\]\]>The Employer’s Guide to Statutory Disability and Paid Family Medical Leave Programshttps://www.sequoia.com/2025/10/the-employers-guide-to-statutory-disability-and-paid-family-medical-leave-programs/

Tue, 28 Oct 2025 16:18:48 +0000https://www.sequoia.com/?p=60189Since 2020, eight states plus the District of Columbia have launched new, mandatory statutory disability and paid family medical leave (PFML) programs, with Minnesota and Maryland scheduled to follow in 2026 and 2027. Meanwhile, California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island continue to operate long-standing programs. This rapid expansion, coupled with the rise of remote work, creates new compliance challenges for employers.

The post [The Employer’s Guide to Statutory Disability and Paid Family Medical Leave Programs](/content/2025/10/the-employers-guide-to-statutory-disability-and-paid-family-medical-leave-programs/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Since 2020, eight states plus the District of Columbia have launched new, mandatory statutory disability and paid family medical leave (PFML) programs, with Minnesota and Maryland scheduled to follow in 2026 and 2027. Meanwhile, California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island continue to operate long-standing programs. This rapid expansion, coupled with the rise of remote work, creates new compliance challenges for employers.

## Coverage Options: State-Run Programs and Private Plans

Statutory disability and PFML programs require employers to provide benefits for eligible employees such as income replacement in the event employees are unable to work for qualifying reasons. Qualifying reasons typically include employees’ own serious health conditions, providing care for family members, and bonding with new children. In most states, employers have two options for providing mandatory PFML coverage, state-run programs and private plans.

### State-run programs

With state-run programs, employers pay for coverage by remitting payroll contributions to the states. The contribution rates are set by the states and are typically reviewed annually. Each state sets one rate based on the pooled experience of all participating employers. The contributions for some PFML programs are shared by employers and employees, while others are funded entirely by employees.

### Private plans

Employers pay for coverage by remitting fully insured premiums (or administrative fees if coverage is self-insured) to an insurer or third-party administrator (TPA) and are exempt from state payroll contributions. The rates are set by the insurer or TPA and, unlike the state-run programs, are based on each employer’s unique risk profile, with rates varying based on employer-specific claims experience and/or industry and demographic factors.

Employers may deduct contributions from employees to offset private plan costs if employee contributions are permitted under the state-run program. Many states stipulate that private plans cannot cost employees more than the state-run programs, so private plan costs that exceed state-run program costs must be borne by employers.

**Exceptions:**

- District of Columbia and Rhode Island: state-run programs only (private plans are not permitted)
- Hawaii: private plans only (there is no state-run program)

## Why Employers Explore Private Plans

Private plans have some advantages that make them worth considering.

### Potential cost savings

The rates for private plans are set by insurers, allowing for potential cost savings compared to the state-run programs. Industry and demographic factors have a substantial impact on pricing, and employers in white collar industries such as technology are viewed favorably from a risk perspective. As a result, employers in these industries often receive financially competitive rates compared to the state contribution rates.

### Integration with other disability and leave programs

Having one vendor administer a private plan in conjunction with other programs like short-term disability (STD), FMLA, and other employer leaves, which often run concurrently, can provide a more integrated, simplified experience. HR, benefits, and payroll teams can expect less back-and-forth when partnering with one vendor versus working with multiple entities (states for PFML, vendors for STD/leave).

### Improved service and administration

Disability claim adjudication and leave of absence administration is a core competency of insurers and TPAs. Vendors leverage their experience, investments in technology, and efficient processes to deliver superior service. Private plans can provide employers with faster claim decisions compared to state-run programs and access to a dedicated account manager. Employers with private plans have greater access to reporting and analytics through vendor portals, whereas state-run programs provide limited insight.

### Improved employee experience

Having a coordinated intake process for STD, FMLA, employer leaves, and statutory disability and PFML programs means employees can avoid separate intake processes with multiple entities. The vendor administering a private plan will conduct a coordinated intake process for all applicable programs they manage, often utilizing a single claim and leave system. The result is less paperwork for employees, more consistent communication, and one point of contact.

## Which Option is Right for You?

Although private plans offer many advantages, employers should evaluate private plans on a case-by-case basis, being mindful of the following key considerations.

### Eligible employee population size

If employers do not have a minimum number of eligible employees (e.g. five to 10), vendors may not offer private plans. For California private plans in particular, vendors have higher minimum employee thresholds (e.g. 500) due to the more stringent requirements and increased implementation effort required from employers and vendors. If vendor minimum size thresholds are met, employers with smaller eligible employee populations should weigh the benefits of private plans against the implementation effort required and the volume of claims likely to occur.

### Funding options

Most states allow vendors to provide both fully insured and self-insured private plans. California and Washington are exceptions in that private plans must be self-insured. Fully insured private plans (or the state-run programs for California and Washington) are recommended for smaller eligible employee populations. When the number of eligible employees for a given statutory PFML program exceeds certain thresholds (250 employees as a general rule), employers should evaluate self-insured private plans.

### Administrative requirements

Each state has unique requirements for employers seeking to establish private plans. Examples include application fees, employee approval, solvency requirements, segregated funds, and periodic filings.

**Application fees**: These fees represent a relatively small expense payable to the states upon review of an employer’s initial request for a private plan or periodically to recertify an existing private plan.

**Employee approval**: If employee approval is required, employers must facilitate a vote, and a majority of eligible employees must vote in favor of a private plan. Employers must abide by any employee communication requirements in advance of the vote, and ensure appropriate recordkeeping is in place to document employee votes.

**Solvency requirements**: Proof of solvency, typically in the form of a security deposit or surety bond, may be required by states to ensure employers are able to meet the financial obligations of private plans.

**Segregated funds**: For California private plans, employers must set up a separate bank account for employee contributions, and the account must only be charged with benefits and allowable administrative costs incurred from plan operations. All income to the plan, benefit payments, and allowable costs must be shown separate from all other operations of the employer.

**Periodic filings**: Many states require annual reporting or recertification of private plans to verify ongoing compliance. With fully insured private plans, vendors may take responsibility for filings on behalf of the employer. With self-insured plans, more responsibility tends to fall on employers, including adjustments to security deposits or surety bonds, or annual claims reporting.

## Key Takeaways

Private plans may lower costs and provide simplified administration for employers. Employees benefit from a coordinated intake process with faster claim decisions and payment. Population size is often a determining factor of whether private plans are a good fit. Employers must weigh the advantages of private plans against added responsibilities on a state-by-state basis.

## Have Questions about your Life, Disability, and Leave Benefits Strategy?

To support companies and their employees, Sequoia’s Leave Advisory team provides strategic insight, compliance expertise, customized benchmarking, underwriting, employee communications and vendor management services. To learn more, [connect with a Sequoia advisor](/content/form/consultation/index.html).

\]\]>\[Updated\] Prohibition of Gag Clauses: Attestation Guidance for Employershttps://www.sequoia.com/2025/10/prohibition-of-gag-clauses-attestation-guidance-for-employers/

Tue, 28 Oct 2025 02:58:00 +0000https://www.sequoia.com/?p=42877Recently, the Departments of Labor, Health and Human Services, and Treasury (collectively “the Departments”) released guidance on the annual attestation requirement associated with the prohibition of gag clauses, which was enacted as part of the Consolidated Appropriations Act, 2021 (CAA). While the prohibition of gag clauses has been in effect since December 27, 2020, the annual attestation requirement will be due for the first time on December 31, 2023, and will be due annually on December 31st thereafter, explained further below.

The post [\[Updated\] Prohibition of Gag Clauses: Attestation Guidance for Employers](/content/2025/10/prohibition-of-gag-clauses-attestation-guidance-for-employers/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

**Updated 10/23/2025**: Starting with the 2025 attestation (due December 31, 2025), employers must confirm compliance not only in their own contracts but also in any “downstream” agreements (see Q6 of [FAQs Part 69](https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-69)) . A downstream agreement is a contract between an employer’s service provider – e.g., third-party administrator (TPA) – and a third party.

Importantly, if a downstream agreement contains terms that restrict a plan’s access to cost, quality, or claims data, it creates a prohibited gag clause. Practically speaking, this may require employers to confirm with their TPA whether any downstream agreements include such restrictions (and should ensure this confirmation is incorporated into service agreements).

Note that this guidance reinforces current industry practice of carriers and TPAs proactively providing confirmation in support of gag clause compliance.

The FAQs also confirm that attestation is required, even if there are non-compliant agreements (see [Q9](https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-69) for additional guidance on how to report and identify non-compliant provisions).

Original Article:

Recently, the Departments of Labor, Health and Human Services, and Treasury (collectively “the Departments”) released guidance on the annual attestation requirement associated with the prohibition of gag clauses, which was enacted as part of the Consolidated Appropriations Act, 2021 (CAA). While the prohibition of gag clauses has been in effect since December 27, 2020, the annual attestation requirement will be due for the first time on **December 31, 2023**, and will be due annually on December 31st thereafter, explained further below.

## Compliance Snapshot

- The first Gag Clause Prohibition Compliance Attestation (GCPCA) submission is **due December 31, 2023**, and will cover the period of December 27, 2020, through the date of the attestation.
- Subsequent GCPCA submissions are due by December 31st of each year thereafter.
- Group health plans can satisfy their reporting obligations by having third parties, such as carriers or third-party administrators (TPAs), submit the attestation on their behalf.

## Background

As part of overall transparency efforts, the CAA prohibition of gag clauses prohibits plans and issuers (i.e., insurance carriers) from entering into an agreement with a provider or TPA that would restrict the plan from providing cost or care information to plan participants, accessing de-identified claims data, and sharing the information per privacy regulations with a business associate. As part of this requirement, plans and insurance carriers must annually attest to the Departments that they are in compliance.

## Plans Required to Attest and Exceptions

All group health plans (including fully insured, level funded, self-insured, and grandfathered plans) are required to attest; however, excepted benefits (e.g., standalone dental or vision plans and certain employee assistance programs) and short-term, limited-duration insurance are exempt from this requirement. In addition, the requirement to submit a GCPCA will not be enforced for plans that consist solely of health reimbursement arrangements (HRAs), or other account-based group health plans (such as health care flexible spending accounts (FSAs).

## Recent Guidance

While the prohibition of gag clauses has been effective since December 27, 2020, enforcement of the annual attestation requirement had been delayed pending further guidance. On February 23, 2023, the Department released guidance and instructions related to the attestation requirement via [FAQs Part 57](https://www.cms.gov/files/document/aca-part-57.pdf) and [CMS resources](https://www.cms.gov/cciio/programs-and-initiatives/other-insurance-protections/gag-clause-prohibition-compliance).

[FAQs Part 57](https://www.cms.gov/files/document/aca-part-57.pdf) explain that the first attestation should cover the period of December 27, 2020 (or the effective date of the applicable group health plan, if later) through the date of submission, and is due no later than December 31, 2023. All subsequent GCPCA submissions are due by December 31st of each year thereafter, covering the period since the last preceding attestation. The GCPCA will be submitted electronically through this [CMS website](https://hios.cms.gov/HIOS-GCPCA-UI), and the instructions and user manual are available [here](https://www.cms.gov/cciio/programs-and-initiatives/other-insurance-protections/gag-clause-prohibition-compliance). For more information, see [Q5 through Q13](http://(specifically%20Q5%20through%20Q13)) of the FAQs.

## Employer Action

Employers are responsible for complying with the prohibition of gag clauses and attesting compliance with the requirement. That said, employers should confirm that any agreements they have in place with a provider or TPA comply with the prohibition on gag clauses and that the third party will attest such compliance to the Departments annually. Importantly, if agreements currently in effect include any prohibited gag clauses, agreements should be amended to remove such language.

According to the [guidance](https://www.cms.gov/files/document/aca-part-57.pdf), plans can satisfy their attestation obligations by having third parties, such as insurance carriers or TPAs, submit the attestation on their behalf. As such, employers should do the following, based on their funding type:

- **Fully insured**: Confirm with their carriers that they will be complying with this requirement, as it is anticipated that most carriers will attest on behalf of fully insured plans. _The group health plan and the insurance carrier are each required to annually submit a GCPCA for fully insured plans. However, if the carrier submits the GCPCA on behalf of the plan, the plan will be considered compliant with this requirement_.
- **Self-insured**: Confirm that their TPA will assist with this requirement and if so, the employer will want to consider entering into a written agreement with the TPA accordingly. Self-insured employers should be aware that they are ultimately liable for any failure to attest (even if the failure is by the TPA). _TPAs that offer fully insured plans **and** act as a TPA for self-insured group health plans are permitted to submit a single GCPCA on behalf of itself, its fully insured group plans, and its self-insured administrative services only (ASO) clients. As such, it is important to communicate with your TPA to avoid duplication_.

## Additional Resources

- [FAQs Part 57](https://www.cms.gov/files/document/aca-part-57.pdf)
- [CMS Resources](https://www.cms.gov/cciio/programs-and-initiatives/other-insurance-protections/gag-clause-prohibition-compliance) (including instructions and reporting template)
- [GCPCA Submission](https://hios.cms.gov/HIOS-GCPCA-UI)
- [FAQs Part 69](https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-69)

\]\]>Open Enrollment: Double Down on Communication as Costs Risehttps://www.sequoia.com/2025/10/open-enrollment-strategy-2025/

Fri, 24 Oct 2025 15:00:17 +0000https://www.sequoia.com/?p=60152Explore how HR teams can elevate benefits communications in 2025 to address rising healthcare costs, improve clarity, and boost employee engagement during open enrollment.

The post [Open Enrollment: Double Down on Communication as Costs Rise](/content/2025/10/open-enrollment-strategy-2025/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Amid [record-breaking health insurance costs](/content/2025/10/managing-benefit-renewal-costs/index.html), many employers are facing difficult choices. Some are increasing employee contributions, while others are making tough trade-offs in plan design, networks, or coverage levels to keep overall costs manageable.

With these decisions comes the need to make sure that your open enrollment communication plan gives employees clarity on benefits changes. Employees need to understand why changes are happening, how their benefits are affected, and what they can do to make informed choices for themselves and their families. That’s why change management is part of every renewal conversation we have with our clients.

Adjusting plan designs or networks can feel daunting, especially for companies focused on attracting and retaining talent. But most employees adapt quickly when communication is clear, empathetic, and timed well. While a vocal minority may resist change, most employees will handle it just fine if they understand the “why” behind the decisions.

That means employers need to move beyond simply announcing changes. They should frame each decision in context: what’s changing, why it’s happening, and how it protects both the company and employees in the long term.

Transparency from leadership goes a long way. When the CHRO or CFO stands up in an open enrollment meeting and explains that the company didn’t take a decision to change a carrier lightly, and that they avoided a 35% premium increase, it changes the tone. People feel included rather than blindsided.

## Open Enrollment Participation Matters

For many companies, attendance at open enrollment sessions has declined sharply. I see this firsthand: We’ll show up to an OE session for a 200-person company and only 50 employees attend. Or they’ll rely on the recording, but we all know how that goes. Most people just fast forward to find the one answer they need.

Low participation hurts understanding and breeds frustration later. We find that employees who skip sessions often reach out in January surprised by changes that were clearly explained months earlier. If that’s been normal for several years, imagine the frustration when employers must make major changes due to rising costs.

Even if plan changes are minimal, employers need to reset expectations that participation isn’t optional. Open enrollment education must be treated as part of the employee experience.

## 5 Best Practices for Stronger Open Enrollment Communication

To make sure your communication plan has the most reach, here are tips I often give our clients:

**1.** **Start early and keep it going**

If major plan or carrier changes are coming, begin communicating weeks in advance. You can’t just drop the news in November and expect people to adapt. Early, layered messages give employees time to digest and act.

**2.** **Sequence your messaging**

Start with a high-level overview. It could be a simple as, “We’re making some changes this year.” Then follow with details like how to check provider networks, review plan differences, or use digital tools.

**3\. Make sessions interactive**

Replace one-hour lectures with two-way discussions. Share materials early and invite questions and feedback during the sessions. Employees feel more informed when they can engage directly with decision-makers, HR leaders, or benefits advisors.

**4\. Set clear attendance expectations**

Encourage or even require attendance at open enrollment meetings. Consider tracking participation or offering incentives for attendance and engagement.

**5\. Plan for year-round education**

I encourage employers to use shorter, topic-specific sessions throughout the year, such as how to access carrier portals in January, the nuances of the prescription drug plan in March, and preventive care in the summer. Also, urge employees to take advantage of digital tools like [Sequoia OS](/content/solutions/platform/index.html), which make benefits navigation easier and help reinforce education beyond open enrollment.

## Build a Culture of Benefits Literacy

Ultimately, open enrollment is about empowerment and helping employees be good consumers, understand what they’re paying for, and make informed decisions.

By communicating early, transparently, and with empathy, employers reduce confusion and reinforce trust. The most successful companies will be those that help employees feel confident in their choices, even in a time of change.

# Ready to Strengthen Your Benefits and Open Enrollment Strategy?

[Connect with a Sequoia advisor](/content/form/consultation/index.html) to build a benefits strategy and communication plan that supports both your business goals and your workforce.

\]\]>Are You Really Covered? Why General Liability Isn’t Enough for Third-Party Riskhttps://www.sequoia.com/2025/10/third-party-liability/

Wed, 22 Oct 2025 19:36:52 +0000https://www.sequoia.com/?p=60099Innovation comes with exposure. See why startups and investor-backed companies need more than general liability to protect against costly third-party claims.

The post [Are You Really Covered? Why General Liability Isn’t Enough for Third-Party Risk](/content/2025/10/third-party-liability/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Imagine this: A software update goes live, and a client’s system fails, costing them thousands in revenue. Or imagine a vendor’s outage delays your product launch, triggering a breach-of-contract claim that could have ripple effects across your business.

General liability (GL) is the backbone of most insurance programs. It covers bodily injury and property damage, which are critical protections, no doubt. But it doesn’t extend to the scenarios above.

Too often, business leaders assume GL is a catch-all. It’s not. And today — when social inflation and “nuclear verdicts” in the millions are increasing — relying on GL coverage alone can leave your company exposed to serious financial risk, especially when it comes to third-party liability.

## Third-Party Liability Defined

Third-party liability arises when someone outside your company (clients, vendors, or customers) claims you’ve caused them harm. And that harm isn’t just a scratched laptop or a minor delay. It can be lost revenue, mismanaged services, or even reputational damage. That’s why a software glitch, late shipment, or a misstep by a board member can trigger claims that GL alone won’t cover.

## The Exposures You Might Be Missing

The real question isn’t whether your company could face third-party claims, it’s which types of claims you’re exposed to and whether your coverage will respond when they arise. Here are additional coverage options you might consider:

- **Errors & Omissions (E&O) /Professional liability**

Protects against claims of negligence, misrepresentation, and financial harm resulting from professional services.
- **Directors & Officers**

Shields board members and investors from third-party claims related to decisions made in their corporate roles.
- **Fiduciary liability**

Safeguards the personal assets of fiduciaries against claims of mismanagement of employee benefit plans or plan assets.
- **[Cyber Liability](/content/2025/09/cyber-liability-risk/index.html)**

Provides coverage for incidents like ransomware attacks, data breaches, and failures in network security or privacy protections.
- **Auto Liability** Even without a company fleet, coverage for hired and non-owned vehicles is essential for employees driving on company business.
- **Umbrella Coverage** Backup insurance adds an extra layer of protection when your standard liability coverage isn’t enough.

## Don’t Overlook Defense Costs

When a claim is filed, legal defense costs can either be counted inside or outside your insurance policy limit. Understanding this section of your policy will help you understand how much protection it truly provides.

- **Outside the limit**: Legal fees don’t reduce your claim limit. You have full coverage for settlements.
- **Inside the limit**: Legal fees reduce the amount available for a payout. If an E&O policy is $1M and you spend $300K defending a claim, only $700K remains.

## Why Contracts Aren’t Enough

Contracts feel safe, but in reality, they have limits. Indemnity clauses, certificates of insurance, and credit checks are standard, but they don’t guarantee coverage. A vendor may have an insurance certificate, but that snapshot doesn’t ensure active coverage or that exclusions won’t apply when you need it most.

Due diligence is important. Solutions from companies like Dun & Bradstreet can help assess a vendor’s financial stability.

## How to Protect Your Business

To figure out if you have all the coverage you need, ask yourself: “If the worst-case scenario happened tomorrow, would my insurance protect me?” Then take these steps:

**Conduct a risk assessment**

Identify exposures from third-party relationships, data handling, and physical assets. Review your existing policies with fresh eyes and look for outdated limits, missing endorsements, or misaligned coverage.

**Partner with a knowledgeable broker**

You don’t need to be an insurance expert, but you do need a partner who understands the terrain, anticipates risks, and helps build a safety net that protects both your balance sheet and your reputation.

**Educate your leadership team**

It’s important that your leadership understands how coverage decisions impact financial resilience, reputation, and growth.

With the right coverage, you can focus on what matters most: growing your business with confidence, knowing that when third-party risks arrive, you’re ready.

## Ready to strengthen your risk coverage?

Don’t wait for a claim to reveal the gaps in your insurance. [Connect with a Sequoia advisor](/content/form/consultation/index.html) to assess your third-party risk exposure and build a coverage strategy that protects your business from every angle.

**Related:**

- [Cyber Liability Risk in the Age of AI: Smarter Tools, Higher Stakes](/content/2025/09/cyber-liability-risk/index.html)
- [Risk Management Is a Story Worth Telling](/content/2025/08/risk-management-is-a-story-worth-telling/index.html)
- [Travel Risks: Why Employers’ Duty of Care Doesn’t Take Holidays](/content/2025/11/duty-of-care-risk-strategy/index.html)

\]\]>Updated: DOL Plans to Rescind Biden-Era Independent Contractor Rulehttps://www.sequoia.com/2025/10/dol-plans-to-rescind-biden-era-independent-contractor-rule/

Mon, 20 Oct 2025 17:30:53 +0000https://www.sequoia.com/?p=60063On September 4, 2025, the Department of Labor (DOL) announced its intention to rescind a 2024 Biden-era rule (“2024 Final Rule”) for determining whether a worker was an “employee” or an “independent contractor” under the Fair Labor Standards Act (FLSA). The DOL previously announced in May that it would no longer enforce the 2024 Final Rule and instead, would rely on the 2008 “economic realities” test, as set forth in Fact Sheet #13 and Opinion Letter FLSA 2019-06, for determining independent contractor status.

The post [Updated: DOL Plans to Rescind Biden-Era Independent Contractor Rule](/content/2025/10/dol-plans-to-rescind-biden-era-independent-contractor-rule/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

**Updated April 17, 2026**: The U.S. Department of Labor has issued a Notice of Proposed Rulemaking to rescind the 2024 independent contractor rule and reinstate the 2021 “economic reality” test, with targeted revisions. The proposal aims to replace the current framework with a “core factor” analysis under the “economic reality” test and that would apply across the Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA), and Migrant and Seasonal Agricultural Worker Protection Act (MSPA).

Original Post: October 20,2025

On September 4, 2025, the [Department of Labor (DOL) announced](https://www.dol.gov/newsroom/releases/osec/osec20250904) its intention to rescind a 2024 Biden-era rule (“2024 Final Rule”) for determining whether a worker was an “employee” or an “independent contractor” under the Fair Labor Standards Act (FLSA). The DOL previously announced in May that it would no longer enforce the 2024 Final Rule and instead, would rely on the 2008 “economic realities” test, as set forth in [Fact Sheet #13](https://www.dol.gov/sites/dolgov/files/WHD/fact-sheets/whdfs13.pdf?5cj98ux83rc) and [Opinion Letter FLSA 2019-06](https://www.dol.gov/sites/dolgov/files/WHD/opinion-letters/FLSA/FLSA2019-6.pdf?8c441z4duej), for determining independent contractor status.

The “economic realities” test is widely seen as more “employer friendly” compared to the 2024 Final Rule, meaning, it will now be easier to classify workers as independent contractors under the FLSA. Among other requirements, the FLSA requires employers to pay employees federal minimum wage and overtime, but does not require the same for independent contractors.

It is important to note, however, that certain states and the IRS impose different tests for independent contractor status. For instance, California, Massachusetts, and New Jersey, impose a stricter “ABC test.” Therefore, a worker could be considered an employee under the California “ABC test” (and subject to California minimum wage and overtime, meal and rest breaks, paid sick leave, etc.), even if they are considered an independent contractor under the federal “economic realities” test (and not subject to federal FLSA wage and overtime protections).

**Employer Takeaways**

Though the DOL announcements signal a more employer friendly stance for purposes of FLSA compliance, employers must still ensure they follow state laws when determining independent contractor status.

**Additional Resources**

- [DOL News Release on Regulatory Agenda](https://www.dol.gov/newsroom/releases/osec/osec20250904) (September 4, 2025)
- [DOL News Release on Independent Contractor Status](https://www.dol.gov/newsroom/releases/whd/whd20250501) (May 1, 2025)
- [Fact Sheet #13](https://www.dol.gov/sites/dolgov/files/WHD/fact-sheets/whdfs13.pdf?5cj98ux83rc)
- [Opinion Letter FLSA 2019-06](https://www.dol.gov/sites/dolgov/files/WHD/opinion-letters/FLSA/FLSA2019-6.pdf?8c441z4duej)

\]\]>IRS Releases 2026 Limits for Health FSAs, Commuter Benefits, Adoption Assistance, and Morehttps://www.sequoia.com/2025/10/irs-releases-2026-limits-for-health-fsas-commuter-benefits-adoption-assistance-and-more/

Wed, 15 Oct 2025 14:27:06 +0000https://www.sequoia.com/?p=59990The IRS released Revenue Procedure 2025-32, announcing the adjusted contribution limits for health flexible spending accounts (Health FSAs), among other limits, for the 2026 calendar year.

The post [IRS Releases 2026 Limits for Health FSAs, Commuter Benefits, Adoption Assistance, and More](/content/2025/10/irs-releases-2026-limits-for-health-fsas-commuter-benefits-adoption-assistance-and-more/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

The IRS released Revenue Procedure 2025-32, announcing the adjusted contribution limits for health flexible spending accounts (Health FSAs), among other limits, for the 2026 calendar year.

The 2026 limits, as compared to the 2025 limits, are outlined below:

|     |     |     |
| --- | --- | --- |
|  | **2026** | **2025** |
| **Health FSA** | $3,400 | $3,300 |
| **Maximum Health FSA Carryover Amount** | $680 | $660 |
| **Dependent Care FSA** | $7,500 | $5,000 |
| **Qualified Commuter/Parking Benefits** | $340 | $325 |
| **Adoption Assistance Tax Credit** | $17,670 | $17,280 |

In addition, the annual changes to the Affordable Care Act (ACA) maximum out-of-pocket limits were released earlier this year by the Department of Health and Human Services published in final regulations, and are shown below:

|     |     |     |
| --- | --- | --- |
|  | **2026** | **2025** |
| **ACA Maximum Out-of-Pocket Limit** | $ 10,600 (single)/<br>$ 21,200 (family) | $ 9,200 (single)/<br>$ 18,400 (family) |

As a reminder, the 2026 limits released this May in IRS Revenue Procedure 2025-19 for health savings accounts (HSAs) and high deductible health plans (HDHPs) are provided in our blog, Sequoia Foreword: [2026 Benefit Limits: HSA, HDHP, and ACA](/content/2025/05/2026-benefit-limits-hsa-hdhp-and-aca/index.html).

**Employer Action Items**

- Employers should ensure their systems, documents, and enrollment materials are updated with the 2026 limits.
- Employers should notify their employees of the new 2026 limits.

**Additional Resources**

- [IRS Revenue Procedure 2025-32](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf)
- [IRS Revenue Procedure 2025-19](https://www.irs.gov/pub/irs-drop/rp-25-19.pdf)
- [Final Regulations](https://www.federalregister.gov/documents/2025/06/25/2025-11606/patient-protection-and-affordable-care-act-marketplace-integrity-and-affordability#p-1020)
- Sequoia Foreword: [2026 Benefit Limits: HSA, HDHP, and ACA](/content/2025/05/2026-benefit-limits-hsa-hdhp-and-aca/index.html)

\]\]>Navigating the Legal Landscape of Gender-Affirming Care in Employer Health Planshttps://www.sequoia.com/2025/10/navigating-the-legal-landscape-of-gender-affirming-care-in-employer-health-plans/

Wed, 15 Oct 2025 14:23:41 +0000https://www.sequoia.com/?p=59988Gender-affirming care has become a hot topic in recent news with shifting federal policies and conflicting court decisions creating a complex and sometimes contradictory legal environment. For employers sponsoring group health plans, this evolving landscape presents significant

compliance challenges especially as state laws, federal statutes and constitutional interpretations increasingly deviate. Recent litigation surrounding exclusions for gender-affirming care highlight the complexity of coverage decisions in employer group health plans. While states may have broader authority to restrict access under state constitutional law, federal nondiscrimination statutes can impose obligations that directly affect plan design and administration.

The post [Navigating the Legal Landscape of Gender-Affirming Care in Employer Health Plans](/content/2025/10/navigating-the-legal-landscape-of-gender-affirming-care-in-employer-health-plans/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Gender-affirming care has become a hot topic in recent news with shifting federal policies and conflicting court decisions creating a complex and sometimes contradictory legal environment. For employers sponsoring group health plans, this evolving landscape presents significant compliance challenges especially as state laws, federal statutes and constitutional interpretations increasingly deviate. Recent litigation surrounding exclusions for gender-affirming care highlight the complexity of coverage decisions in employer group health plans. While states may have broader authority to restrict access under state constitutional law, federal nondiscrimination statutes can impose obligations that directly affect plan design and administration.

**Understanding Gender-Affirming Care and Legal Protections**

Gender-affirming care encompasses a range of medical services including counseling, hormone therapy, and surgical procedures designed to support individuals whose gender identity differs from the sex assigned at birth. In recent years, federal agencies and courts have increasingly recognized blanket exclusions of such care as a form of sex discrimination under the Affordable Care Act (ACA) and Title VII of the Civil Rights Act. At the same time, several states have passed laws restricting access to gender-affirming treatments, particularly for minors. This has created a direct conflict between state level restrictions and federal nondiscrimination protections.

The transition between presidential administrations has further complicated the regulatory environment. Under President Biden, the Department of Health and Human Services issued a final rule interpreting ACA Section 1557 to prohibit discrimination based on gender identity. In contrast, the Trump administration rescinded prior guidance and issued policies limiting coverage for pediatric gender-affirming care in federal programs.

These shifts in agency interpretation affect how laws are enforced, what compliance looks like, and the likelihood of audits or investigations. While courts ultimately determine the scope of statutory protections, agency actions will affect how those protections are applied in practice.

**Recent Court Case Summaries**

Three recent court cases demonstrate the legal complexities employers must navigate through:

**United States v. Skrmetti (U.S. Supreme Court, 2025)**

Tennessee enacted a law prohibiting health care providers from providing care that alter a minor’s hormonal balance, removes sex organs, or otherwise changes a minor’s physical appearance to allow “a minor to identify with, or live as, a purported identity inconsistent with the minor’s sex.” Plaintiffs challenged the law under the Equal Protection Clause of the Fourteenth Amendment, arguing that it discriminated against transgender individuals and warranted heightened scrutiny. The Supreme Court disagreed, applying the more deferential “rational basis” review. It upheld the law, finding that the state had legitimate interest in regulating medical treatments for minors. The Court declined to treat transgender status as a suspect or quasi suspect classification, thereby limiting the reach of constitutional protections in this context. However, the Court did not decide whether such laws might conflict with federal statutory nondiscrimination protections like ACA Section 1557.

**L.B. v. Premera Blue Cross (W.D. Wash., 2025**)

This case involved two transgender minors in Washington State who sought insurance coverage for medically necessary chest reconstruction surgery. Premera Blue Cross categorically excluded coverage for mastectomies, breast reduction surgeries, and chest/top surgery for “female to male” or “female to non-binary/gender neutral” individuals under age 18. However, the policy provided that a mastectomy to treat gynecomastia (breast tissue swelling in boys or men) could be covered as medically necessary in certain circumstances. The plaintiffs sued under ACA Section 1557, which prohibits sex-based discrimination in federally funded health plans. In 2023, the district court ruled the exclusion violated the ACA because it singled out transgender minors for denial of necessary treatment, which is a form of sex-based discrimination. When Premera sought reconsideration in 2025 following the Skrmetti decision, the court reaffirmed its ruling. It emphasized that statutory protections under the ACA are broader than constitutional standards, reinforcing that Section 1557 can impose more expansive nondiscrimination obligations.

**Lange v. Houston County (11th Cir. En banc, 2025)**

Ann Lange, a sheriff’s deputy in Georgia, was denied coverage for gender-affirming surgery under her employer’s health plan, which excluded “sex change surgery.” She sued under Title VII, alleging sex discrimination in employment benefits. Initially, Lange prevailed, with the district court and a panel of the Eleventh Circuit finding the exclusion discriminatory because it disproportionately affected transgender employees. However, in 2025, the full Eleventh Circuit reversed the decision. The majority held that the exclusion was not facially discriminatory since it applied to all employees, regardless of sex or gender identity. Citing Skrmetti, the court held that uniform exclusions do not violate Title VII, even if they disproportionately impact certain groups.

**Employer Takeaways**

These cases highlight the legal uncertainty employers face when designing and administering their group health plans. It is apparent that while constitutional law sets a baseline, federal statutes like ACA Section 1557 and Title VII can impose broader obligations. Currently, there is no federal mandate requiring all group health plans to cover gender-affirming care, unless the plan is subject to Section 1557 of the ACA. Therefore, fully insured plans must provide coverage compliant with the coverage mandates of the state in which the insurance policy is issued. It is important to note that employers that sponsor self-insured group health plans are preempted from state insurance coverage mandates. It is recommended that all plan administrators closely monitor legal developments and agency guidance in this area to make informed decisions about coverage for gender-affirming care.

\]\]>Benefits Renewal Costs Are Surging: Here’s How Smart Employers Stay Aheadhttps://www.sequoia.com/2025/10/managing-benefit-renewal-costs/

Fri, 10 Oct 2025 12:08:06 +0000https://www.sequoia.com/?p=59986Facing unpredictable benefit renewals? Learn what’s driving the surge in costs and how forward-thinking employers are using this season as a turning point for smarter, more sustainable strategies.

The post [Benefits Renewal Costs Are Surging: Here’s How Smart Employers Stay Ahead](/content/2025/10/managing-benefit-renewal-costs/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

After 15 years in the benefits space, I can confidently say this is the most unpredictable renewal season I’ve ever seen.

If you’re a benefits or finance leader in tech, you’ve probably seen renewal numbers that don’t make sense. This year, even the most seasoned teams are asking: What’s really driving these increases?

The truth is there’s no single cause. It’s all of it: COVID catch-up, inflation, claims volatility, carrier strategy shifts, and ongoing market consolidation. Each factor on its own would be manageable. But all of them at once create a perfect storm that’s testing the limits of every benefits budget.

Brokers have always seen renewals fluctuate. What’s unusual this year isn’t just the size of the increases, [it’s how widespread they are](https://www.shrm.org/topics-tools/news/benefits-compensation/employers-brace-15-year-high-health-benefit-cost-hike).

In past cycles, we might have seen a handful of outliers, with most renewals landing in a predictable range. This year, volatility is the norm. Employers that once considered a single-digit renewal high are now relieved to land anywhere near historical averages.

It’s a tough environment for CFOs and HR leaders alike. The numbers look inconsistent across carriers and regions, and the explanations can feel equally varied. But the reality is that the whole ecosystem — claims, pricing, and plan design — is recalibrating at the same time.

When budgets tighten, the first instinct is to negotiate harder. And that makes sense — every organization wants to protect its bottom line. But in this market, negotiating a lower renewal without addressing the underlying cost drivers may only buy temporary relief.

For many employers, the current strategy sounds something like: “We’ll take the increase this year and keep things stable for our employees. We’ll look at making changes next year.”

That approach is understandable, but it’s also risky. Deferring tough decisions doesn’t make them disappear. It just compounds the challenge at the next renewal. Kicking the can down the road today means rolling it uphill tomorrow.

In a year like this, the role of a benefits advisor has to expand. Negotiation is still critical, but it’s no longer enough on its own.

## A Broker’s Expanded Role: Exploring Every Option

At Sequoia, our approach is to show clients every lever available, not just the familiar ones. That means exploring multiple paths at once — plan design changes, network adjustments, funding mechanisms, and emerging cost-management solutions.

There’s no silver bullet. What works for a 100-person company on a level-funded plan may not make sense for a 1,000-person company that’s self-funded. But what’s consistent is the need for employers to see the full picture and understand the tradeoffs of each decision, both short-term and long-term.

A good broker’s job isn’t just to win the best rate this year. It’s to help you make decisions that support a sustainable benefits strategy over the next several years, because the companies that will come out stronger from this renewal cycle are the ones using it as a turning point, not a temporary fix.

If your benefits strategy hasn’t evolved in the past few years, now is the time to start rethinking it. Begin reviewing your utilization data early next year. Ask how your plan design aligns with your current workforce and budget. And partner with your broker to model what the following year’s renewal could look like before it lands on your desk.

While no one can fully predict the next renewal season, one thing is clear: the organizations that plan now will have more choices later. But that also creates opportunity — the chance to design a strategy that balances cost, competitiveness, and care for your people.

As brokers, our job is to help you see all the options on the table and make the best decisions for your business — this year and the years ahead.

## Start Building a Smarter Benefits Strategy Today

Want to explore your options before your next renewal hits? [Connect with a Sequoia advisor](/content/form/consultation/index.html) to start building a strategy that balances cost, competitiveness, and care — not just for this year, but for the long haul.

**Related:**

- [Open Enrollment: Double Down on Communication as Costs Rise](/content/2025/10/open-enrollment-strategy-2025/index.html)
- [AI, Healthcare, and the Office Comeback: Rethinking People Spend in 2025](/content/2025/09/rethinking-people-spend-2025/index.html)
- [How Employers Can Contain GLP-1 Costs in Their Health Plans](/content/2025/04/glp1-costs-strategies/index.html)
- [Designing Smarter Benefits Strategies with Contribution Modeling](/content/2025/08/designing-smarter-benefits-strategies-with-contribution-modeling/index.html)

\]\]>FTC Abandons Nationwide Ban on Noncompetes, Shifts to Enforcement Actionhttps://www.sequoia.com/2025/10/ftc-abandons-nationwide-ban-on-noncompetes-shifts-to-enforcement-action/

Thu, 09 Oct 2025 16:37:31 +0000https://www.sequoia.com/?p=59972On September 5, 2025, the Fair Trade Commission (FTC) formally withdrew its appeal in Ryan, LLC v. FTC (Ryan) and Properties of the Villages v. FTC (Properties of the Villages), which effectively ended its attempt to regulate noncompete agreements through a nationwide ban.

The post [FTC Abandons Nationwide Ban on Noncompetes, Shifts to Enforcement Action](/content/2025/10/ftc-abandons-nationwide-ban-on-noncompetes-shifts-to-enforcement-action/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

On September 5, 2025, the [Fair Trade Commission (FTC) formally withdrew its appeal](https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-files-accede-vacatur-non-compete-clause-rule) in _Ryan, LLC v. FTC (Ryan) and Properties of the Villages v. FTC (Properties of the Villages)_, which effectively ended its attempt to regulate noncompete agreements through a nationwide ban.

Instead, the FTC has shifted its focus to enforcement actions against companies that issue noncompete agreements that it deems unfair or uncompetitive. In [one such recent action](https://www.ftc.gov/news-events/news/press-releases/2025/09/ftc-takes-action-protect-workers-noncompete-agreements), the FTC ordered a pet cremation company to stop enforcing their noncompete agreements because, as the FTC asserted, the agreements harmed worker mobility and reduced competition in the labor market.

**What does this mean for the future of noncompete agreements?**

Though the FTC is no longer pursuing a nationwide ban, it has signaled an ongoing commitment to regulating noncompetes and employers should be careful when imposing and enforcing these agreements.

**How did we get here?**

Historically, the federal government rarely intervened in noncompete actions and left enforcement to state law and the courts. In 2020, the FTC began scrutinizing noncompete agreements, arguing they can constitute an unfair method of competition in violation of Section 5 of the Fair Trade Commission Act, which prohibits “unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce.”

This scrutiny culminated on April 23, 2024, when the FTC issued a [Final Rule (Rule)](https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf) that, in essence created a nationwide ban on the use of most noncompete agreements (generally defined as a contractual term between an employer and a worker that typically blocks the worker from working for a competing employer or starting a competing business after the end of the worker’s employment). For more on the Rule, see our blog, “ [FTC Issues Final Rule Banning Non-Competes.](/content/2024/08/ftc-issues-final-rule-banning-non-competes/index.html)”

Immediately after issue, the Rule was challenged in _Ryan, LLC v. FTC (5th Circuit), and Properties of the Villages v. FTC_ (11th Circuit). In August 2024, the Texas District Court in Ryan found the FTC lacked authority to promulgate the Rule and issued a nationwide injunction that stopped the Rule from taking effect on September 4, 2024, as scheduled. That same month, the Florida District Court in _Properties of the Villages_ issued a preliminary injunction, also finding the FTC exceeded its statutory authority.

The FTC initially filed appeals in both rulings. However, on September 5, 2025, the [FTC formally withdrew its appeal in both cases](https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-files-accede-vacatur-non-compete-clause-rule), effectively ending its attempt to regulate noncompete agreements through an administrative, nationwide Rule.

**How has the FTC shifted its approach to regulating noncompete agreements?**

The FTC is now taking a different approach to regulating these agreements, with FTC Chairman Ferguson warning employers that “\[t\]he failure of the Biden Commission’s rule does not mean that employers are free to impose noncompete agreements willy-nilly.”

Specifically, the FTC is regulating these agreements “through enforcement actions against companies that misuse them in violation of the law,” claiming that the actions will provide companies with “transparency about what the agency believes the law requires.”

In short order, the FTC has ramped up enforcement efforts:

- On February 26, 2025, the FTC [announced the formation of a Joint Labor Task Force](https://www.ftc.gov/news-events/news/press-releases/2025/02/ftc-launches-joint-labor-task-force-protect-american-workers) to prioritize the investigation of deceptive, unfair, and anticompetitive labor practices that negatively affect workers mobility and ability to earn a living, which can include noncompete agreements.
- On September 4, 2025, the [FTC ordered Gateway Services, Inc.](https://www.ftc.gov/news-events/news/press-releases/2025/09/ftc-takes-action-protect-workers-noncompete-agreements), a pet cremation company with 1,800 employees, to stop enforcing its noncompete agreements against its employees. The FTC argued Gateway’s agreements were anticompetitive because they unfairly altered the bargaining positions between employees and Gateway, they suppressed competition by impeding entry or expansion of the pet cremation industry, and discouraged employees from opening competing businesses.
- On September 4, 2025, the FTC issued a [Request for Information (RFI)](https://www.ftc.gov/system/files/ftc_gov/pdf/2025-Noncompete-RFI.pdf), inviting “public comment to better understand the scope, prevalence, and effects of employer noncompete agreements” and to “gather information to inform possible future enforcement actions.”
- On September 10, 2025, the [FTC issued noncompete warning letters](https://www.ftc.gov/news-events/news/press-releases/2025/09/ftc-chairman-ferguson-issues-noncompete-warning-letters-healthcare-employers-staffing-companies) to healthcare employers and staffing companies, urging them to conduct a comprehensive review of their employment agreements – including any noncompete or restrictive agreements to ensure they are appropriately tailored to comply with the law.
- On September 17, 2025, the [FTC announced it would host a public workshop](https://www.ftc.gov/news-events/news/press-releases/2025/09/ftc-announces-workshop-noncompete-agreements), “Moving Forward: Protecting Workers from Anticompetitive Noncompete Agreements,” that would include public statements from FTC Commissioners, victims of unfair and anticompetitive noncompete agreements, and leading experts in the field.

**What are next steps for employers?**

The FTC’s enforcement actions provide insight on what employers should consider when imposing noncompete agreements, such as:

- Ensuring compliance with any applicable state law. For instance, both New York and California have state laws restricting noncompete agreements, with California recently expanding its law to include contracts signed outside of the state and to provide employees with a private right of action against employers who impose or attempt to enforce an unlawful noncompete.
- Tailoring the noncompete agreements according to an employee’s role, skill level, duties, and access to trade secrets or strategic knowledge (noting that the FTC has often targeted noncompete agreements on low wage or non-executive workers).
- Ensuring the noncompete agreements demonstrate a pro-competitive rationale and are narrowly tailored to protect legitimate business interests (e.g., confidential information, customer relationships, or investments).
- Tailoring the scope of activity, geography, and duration of the agreements so they are not overly broad and are not designed to block employee mobility (e.g., provisions that bar workers from entire industries or geographic regions).

Employers should also have their noncompete agreements reviewed by employment counsel to ensure they comply with applicable state law and are written in a way to decrease scrutiny from the FTC.

**Resources**

- Sequoia Blog: [FTC Issues Final Rule Banning Non-Competes](/content/2024/08/ftc-issues-final-rule-banning-non-competes/index.html)
- [FTC Final Rule on Noncompete Agreements](https://www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf)
- [FTC Dismisses Appeals in Ryan and Properties of the Villages](https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-files-accede-vacatur-non-compete-clause-rule)
- [FTC Chairman Ferguson Issues Noncompete Warning Letters to Healthcare Employers and Staffing Companies](https://www.ftc.gov/news-events/news/press-releases/2025/09/ftc-chairman-ferguson-issues-noncompete-warning-letters-healthcare-employers-staffing-companies)
- [FTC Issues Request for Information on Employee Noncompete Agreements](https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-issues-request-information-employee-noncompete-agreements)
- [FTC Takes Action Against Gateway Services to Protect Workers from Noncompete Agreements](https://www.ftc.gov/news-events/news/press-releases/2025/09/ftc-takes-action-protect-workers-noncompete-agreements)
- [FTC Launches Joint Labor Task Force to Protect American Workers](https://www.ftc.gov/news-events/news/press-releases/2025/02/ftc-launches-joint-labor-task-force-protect-american-workers)

\]\]>Open Enrollment: 5 Compliance Essentials for Employershttps://www.sequoia.com/2025/10/open-enrollment-5-compliance-essentials-for-employers/

Wed, 08 Oct 2025 16:42:30 +0000https://www.sequoia.com/?p=59968As open enrollment approaches, employers with group health plans face a range of compliance requirements. From mandatory notices to employee communications, careful preparation helps prevent costly mistakes. Here are five key compliance areas to prioritize.

The post [Open Enrollment: 5 Compliance Essentials for Employers](/content/2025/10/open-enrollment-5-compliance-essentials-for-employers/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

As open enrollment approaches, employers with group health plans face a range of compliance requirements. From mandatory notices to employee communications, careful preparation helps prevent costly mistakes. Here are five key compliance areas to prioritize.

## 1\. Regulatory Notices and Disclosures

Employers must distribute specific notices and disclosures alongside open enrollment materials, ensuring delivery aligns with applicable distribution rules.

**Timing matters**: Certain notices, such as the Children’s Health Insurance Program (CHIP) Notice and the Women’s Health and Cancer Rights Act (WHCRA) Notice, must be distributed **prior to** the start of open enrollment to ensure employees have the information needed to make informed decisions.

**Distribution requirements**: Employers must follow regulatory guidelines for how notices are delivered, whether electronically or in paper form. They must also ensure proper accessibility for all eligible participants.

**Annual review**: It’s important for employers to review notice obligations each year to confirm that materials are up to date and in compliance with current regulations.

**Documentation**: Employers should maintain records of when and how notices were distributed to demonstrate compliance in the event of an audit or inquiry.

Proper notice distribution not only fulfills the employer’s compliance obligations, but it also promotes informed decision-making for employees.

## 2\. ACA Offer of Coverage

Employers subject to the Affordable Care Act’s (ACA) employer mandate must offer affordable, minimum-value coverage to all full-time employees and their dependent children. Employers must also be mindful to not overlook certain employee groups such as interns, temporary staff, or variable hour employees that may meet the definition of a full-time employee.

**Eligibility oversight**: Employers should review their workforce classifications to confirm that full-time employees, including interns and temporary workers who meet eligibility criteria, are offered timely coverage.

**Affordability threshold**: Coverage offered to full-time employees must be affordable based on the IRS-defined thresholds, which are updated annually.

**Safe harbors**: Employers may use the W-2, rate-of-pay, or federal poverty level safe harbors to determine affordability.

**Minimum value**: Coverage offered must pay at least 60% of the total allowed cost of benefits. This can usually be confirmed via plan documents, the plan carrier or third-party administrator.

Thorough eligibility reviews and inclusive enrollment practices help employers to avoid penalties and support compliance with federal requirements.

## 3\. FSA/HSA Interaction

Employers offering both health flexible spending accounts (FSA) and health savings accounts (HSA) must carefully manage eligibility rules to avoid disqualifying employees from HSA contributions.

**Disqualifying coverage**: Unless the FSA is a limited-purpose FSA (covering only dental and vision expenses), employees enrolled in a health FSA cannot contribute to an HSA.

**Grace periods and carryovers**: Funds remaining in a general-purpose FSA, even via a grace period or carryover, can disqualify HSA eligibility unless properly transitioned to a limited-purposes FSA.

**Communication is key**: Employers should clearly explain these plan interactions and offer employees the option to waive FSA carryovers if they wish to contribute to an HSA.

Proper plan design and employee education is essential to avoid inadvertent tax penalties for plan participants.

## 4\. Dependent Verification

Verifying dependent eligibility is both an ERISA fiduciary responsibility and a practical cost-containment strategy for employers.

**Preventing ineligible coverage**: Covering individuals who do not meet eligibility criteria can expose both the employer and employee to financial and legal risk.

**Audit opportunities**: Open enrollment is an ideal time to verify newly added dependents or conduct a broader audit to confirm ongoing eligibility.

**Consistent documentation**: Employers should collect verification documents (e.g., birth certificates, marriage licenses) using a standardized process to ensure fairness and avoid potential discrimination claims. Employers should also note that sometimes plan terms require collection of documentation (e.g., a domestic partner affidavit).

**Plan alignment**: Definitions of “dependent” should be consistent across plan documents and enrollment materials to prevent coverage disputes and administrative errors. Employers should also align eligibility definitions with carrier requirements to prevent claim denials.

A consistent and well-documented verification process helps safeguard plan integrity, ensures benefits are provided only to eligible individuals, and protects all parties from unnecessary risks.

## 5\. Employee Communications

Clear, timely communication is essential to a successful and compliant open enrollment process.

**Multi-channel strategy**: Employers may want to use a combination of communication methods (e.g., email, intranet, webinars, town halls, etc.) to effectively reach employees.

**Plain language**: It is important for employers to present benefit options and changes in clear, simple terms to help employees understand their choices and responsibilities.

**Enrollment timeline**: It is recommended for employers to provide communications well in advance of open enrollment and continue reminders and support throughout the open enrollment period.

**Coverage changes and exceptions**: Clear communication around any plan changes, coverage limitations, or exceptions is critical to a successful open enrollment. If mistakes occur during enrollment, employers should have a documented process for resolving errors fairly and consistently, while maintaining compliance with plan rules. For example, employers may allow employees to make changes to their elections prior to the start of the coverage period for any reason. However, once the plan year begins, changes generally require a qualifying life event under IRS rules.

Transparent communication gives employees confidence in electing their benefits, helping them feel informed and supported throughout the enrollment process.

Open enrollment is more than a logistical exercise; it also serves as a critical compliance checkpoint. By proactively addressing these five areas, employers can reduce risk, enhance employee experience, and fulfill their fiduciary duties. As regulations evolve, staying informed is key to maintaining a compliant and competitive benefits program.

### How Sequoia Helps

Sequoia supports employers during open enrollment by streamlining compliance through expert guidance, practical tools, and proactive checks. For example, we provide required legal notices with instructions for proper distribution, offer resources to navigate ACA requirements, and help clarify FSA/HSA interactions to avoid disqualifying employees from making HSA contributions.

Employers also benefit from sample communication templates, educational materials, and a robust compliance checklist tool. Additionally, Sequoia conducts multiple compliance checks at renewal and ongoing throughout the plan year, to help ensure plans remain compliant with current regulations and utilize best practices. Employers are encouraged to contact us with any questions or requests for assistance during the open enrollment season.

\]\]>Employer Guide to Washington PFML Changes Effective Jan 1, 2026https://www.sequoia.com/2025/10/employer-guide-to-washington-pfml-changes-effective-jan-1-2026/

Fri, 03 Oct 2025 16:26:38 +0000https://www.sequoia.com/?p=59884Companies with employees based in Washington state must take note of the significant changes made to the Washington Paid Family and Medical Leave (WA PFML) law going into effect on January 1, 2026.

The post [Employer Guide to Washington PFML Changes Effective Jan 1, 2026](/content/2025/10/employer-guide-to-washington-pfml-changes-effective-jan-1-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Companies with employees based in Washington state must take note of the significant changes made to the Washington Paid Family and Medical Leave (WA PFML) law going into effect on January 1, 2026.

Under [House Bill (HB) 1213](https://lawfilesext.leg.wa.gov/biennium/2025-26/Pdf/Bill%20Reports/House/1213-S2.E%20HBR%20FBR%2025.pdf?q=20250827141007), the program expands the job protection rights under the state’s paid family and medical leave program in numerous ways, including increased job protection and health insurance coverage.

**Changes to Job Protection**

The law gradually requires more employers to provide job protection than previously required. Prior to January 1, 2026, only employers with 50 or more employees in Washington were required to provide job protection. Smaller employers that were previously exempt from this requirement and meet the size requirements below will be required to begin implementation of job protection for employees over a three-year period as follows:

**Employers Subject to Job Protection Requirements**

|     |     |
| --- | --- |
| **Implementation Date** | Employer Sizes |
| January 1, 2026 | 25-49 Employees in WA state |
| January 1, 2027 | 15-24 Employees in WA state |
| January 1, 2028 | 08-14 Employees in WA state |

**Employee Eligibility**

The new amendment lowers the eligibility requirement for employees to qualify for job protection. The new threshold will require employees to work at least 180 days before the start of leave, regardless of how many hours they have worked. Currently, job protection is only available if an employer has 50 or more employees, and employees are only eligible if they have worked for the employer for at least 12 months and 1,250 hours in a year before the first day of their paid leave.

**Job Protection and FMLA Leave Stacking**

As detailed in the [final bill report](https://lawfilesext.leg.wa.gov/biennium/2025-26/Pdf/Bill%20Reports/House/1213-S2.E%20HBR%20FBR%2025.pdf?q=20250609130031), there is also a new stacking mechanism allowing (but not requiring) employers to count FMLA leave toward the total amount of leave entitled to job protection under the WA PFML, **if the employee was eligible for WA PFML but did not apply for and receive it**.

To utilize this mechanism, employers must provide a **written notice within five business days** of the employee’s initial request for or use of FMLA leave, whichever comes first, and then monthly thereafter for the remainder of the employer’s FMLA 12-month period.

**FMLA Leave Stacking Notice Requirement**

The notice provided must be in a language understood by the employee and delivered in a method that is reasonably certain to be received promptly by the employee and must include the following information:

- Employer is “designating and counting” the unpaid leave as FMLA leave
- The amount of FMLA time used and remaining, which the employer can estimate from information it receives from the state and the employee
- The employer’s 12-month FMLA leave year
- Notice that the FMLA leave is counted against any permitted period of employment protection under the WPFML program because the employee is eligible for the WPFML program but has not applied for and received its benefits
- The start and end date of the FMLA leave
- The total amount of FMLA leave counting toward the new job protection period under the WPFML
- Notice that the employee’s WPFML benefits are not impacted by the stacking of the job protection rights of the FMLA and WPFML

**Job Reinstatement Rights Notice**

Another new provision of the law requires employers to provide a notice of reinstatement rights to any employee taking **more than two weeks of continuous leave or more than 14 days of intermittent leave**. Employers must provide the written notice to the employee at least **five business days before the return-to-work date** and it must include the estimated expiration before the employee’s job restoration is no longer guaranteed and the date of the employee’s first scheduled workday after their leave.

**Employees Must Exercise Their Right to Reinstatement**

Employees will now be required to actively request job reinstatement or risk forfeiting their right to job protection. Unless there is a written agreement in place between the employer and the employee that says otherwise, an employee will lose their right to employment restoration unless they exercise their right on the earlier of the first scheduled workday following: (1) the actual leave period under the FMLA and/or WPFMLA or (2) 16 weeks (18 weeks for incapacity due to pregnancy) of continuous or combined intermittent leave during 52 consecutive calendar weeks.

**Insurance Continuation Now Mirrors New Job Protection Period**

The new amendment expands the employer’s requirement to maintain health insurance coverage to “any period of leave in the PFML Program in which the employee is also entitled to job protection.” This is a change for employers because prior to January 1, 2026, employers were required to continue health insurance coverage during both FMLA and WPFMLA leaves, _**only if**_ there was at least one day of overlap between the two types of leave. Just as before, employees must continue to pay their portion of the insurance premium to maintain coverage.

**Other Changes**

The HB1213 amendment also includes a provision allowing the state through the Employment Security Department (ESD) that administers WPFMLA, to periodically audit employer records for the purpose of assisting with and enforcing compliance.

On September 30 of each year, the ESD calculates the size of each employer to be used in the following calendar year by averaging the number of employees reported by the employer over the last four completed calendar quarters. The calculation is used for determining whether an employer must pay the employer portion of the premium and to verify if the employer qualifies for a small business grant.

**Small Business Grants**

Employers with 150 or fewer employees may apply for a grant through the ESD. The amount of the grant varies, and may be one of the following:

- $3,000 if the employer hires a temporary worker to replace an employee on family or medical leave for a period of seven days or more
- $1,000 as reimbursement for significant additional wage-related costs due to the employees’ leave

Employers may apply for a grant no more than 10 times per calendar year and no more than once for each employee on leave. If an employer with fewer than 50 employees receives a grant, the ESD must assess the employer for all premiums for three years.

For either category of grants the employer is applying for, the employer must submit the application no later than 12 months after the employee’s first day of leave. The ESD must submit payment to the employer within 14 calendar days after receiving a qualifying application. The ESD must send employers certain notices and publish information on it’s [website](https://paidleave.wa.gov/small-businesses/) regarding grant eligibility.

**Employer Action**

Employers should prepare for changes coming to the Washington Paid Family Leave program by updating written policies and procedures to reflect changes now required due to the updated provisions. Employers must provide all [written notices](https://paidleave.wa.gov/employer-roles-responsibilities/) to employees in a language understood by the employee in a timely manner.

**Additional Resources**

- [Washington PFML Webpage](https://paidleave.wa.gov/)
- [Washington PFML Employer Webpage](https://paidleave.wa.gov/employers/)
- [Washington PFML Reporting](https://paidleave.wa.gov/reporting/)
- [Washington PFML Employer Roles and Responsibilities](https://paidleave.wa.gov/employer-roles-responsibilities/)
- [Washington PFML Small Businesses](https://paidleave.wa.gov/small-businesses/)
- [Washington State Employment Security Department](https://www.esd.wa.gov/)

\]\]>Expanding 401(k) Investment Options Through Self-Directed Brokeragehttps://www.sequoia.com/2025/10/expanding-401k-investment-options-through-self-directed-brokerage/

Wed, 01 Oct 2025 16:03:10 +0000https://www.sequoia.com/?p=59859With more access to financial education and investment options, 401(k) participants are more informed, more engaged, and more vocal than ever before about the funds available in their retirement plans.

The post [Expanding 401(k) Investment Options Through Self-Directed Brokerage](/content/2025/10/expanding-401k-investment-options-through-self-directed-brokerage/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

With more access to financial education and investment options, 401(k) participants are more informed, more engaged, and more vocal than ever before about the funds available in their retirement plans.

We have seen a growing interest in the ability to invest beyond the fund lineup offered by an employer-provided retirement plan. Whether employees are looking for investments that align with their values or provide unique diversification opportunities, it can be difficult to build a plan lineup that satisfies everyone. One way that plan sponsors are meeting this new demand is by adding self-directed brokerage options to their 401(k) program. Here’s what employers must know about these options.

## The Benefit of Additional Investment Flexibility

Self-directed brokerage options give employees the ability to invest in options outside of the core investment lineup. For experienced investors, this allows more flexibility to customize their retirement strategy to meet their investment goals. Additional investment options include a larger menu of mutual funds which may include strategies focused on various ESG mandates and faith-based options.

The brokerage window can also offer access to ETFs including unique strategies that track cryptocurrencies, specific sectors, and regionally focused funds. Employees can also invest in individual equities and fixed income securities. While many of these options aren’t appropriate for the core investment menu of a 401(k) plan, they may be valuable to specific employees.

## Self-Directed Brokerage Trends

The addition of a self-directed brokerage window to 401(k) plans has gained significant traction over the last few years. According to PlanSponsor’s 2024 Defined Contribution Survey, roughly 30% of all plans surveyed now include a self-directed brokerage window. The number increases for larger plans — over 55% of surveyed plans with over $200 million in assets include the option. According to their latest public filings, all 10 of the largest cap-weighed companies in the S&P 500 included a self-directed brokerage window.

## Drawbacks to Adding a Self-Directed Brokerage Window

While there are many benefits to adding a self-directed brokerage window, there are also some drawbacks that plan sponsors should carefully consider before adding the option to their plans.

While plan sponsors have the fiduciary responsibility to add and monitor options that are appropriate for a 401(k) plan, the added flexibility increases the risk of poor investment decisions or overtrading. For example, participants could misuse the brokerage window by investing in speculative options that may not be prudent for a retirement savings vehicle.

There is also the potential for higher costs. Brokerage accounts can include trading fees, annual account maintenance fees, and options with higher investment management expenses than investments included in the core lineup. Managing and monitoring the brokerage window can also come with additional administrative complexity for plan recordkeepers, auditors, and sponsors.

## Plan Sponsor Best Practices

As a plan sponsor, it’s important to carefully vet and monitor the self-directed brokerage provider. As the fiduciary, ensuring that all fees are reasonable and clearly disclosed to employees is a requirement. The service provider should include education material for plan participants, including a description of the risks associated with leveraging a self-directed brokerage window along with the fees for using the option. As with any other plan design or investment update, it’s important to work with an advisor to vet the option and carefully document the fiduciary process.

## Need help with your 401(k) plan?

Now that you know the trends and some items to consider with a self-directed brokerage, you can weigh them against your company’s short- and long-term goals. If you need help, Sequoia’s advisors can help you craft a 401(k) that best serves your employees and your business needs. A [Sequoia advisor](/content/form/consultation/index.html) is ready to listen and answer your questions.

**Source**: PLANSPONSOR 2024 Defined Contribution (DC) Survey. Valid through December 31, 2025. © Asset International, Inc. 2025

_Pensionmark® Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark is affiliated through common ownership with Pensionmark Securities, LLC (member SIPC). Pensionmark Financial Group, LLC/Pensionmark Securities, LLC and Sequoia Benefits, LLC are non-affiliated entities. This information is for educational purposes only. Neither Pensionmark Financial Group, LLC (“Pensionmark”) nor its advisers provide tax or legal advice. Please consult with an appropriate tax or legal professional._

\]\]>AI, Healthcare, and the Office Comeback: Rethinking People Spend in 2025https://www.sequoia.com/2025/09/rethinking-people-spend-2025/

Tue, 30 Sep 2025 18:41:59 +0000https://www.sequoia.com/?p=59833Based on the TCB Report, this blog explores how three converging forces — the rise of AI, the surge in healthcare costs, and the shift back to in-office work — are reshaping how companies structure compensation, benefits, and workforce strategy.

The post [AI, Healthcare, and the Office Comeback: Rethinking People Spend in 2025](/content/2025/09/rethinking-people-spend-2025/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

If you’re a CFO or CHRO at a startup or investor-backed company, you’re not imagining it. You’re working with a new talent playbook and what worked in 2023 looks almost old-fashioned in 2025.

The forces shaping the market: [AI is wiping out entry-level jobs](/content/2025/07/ai-and-engineering-jobs/index.html) while creating a feeding frenzy for specialized talent. Healthcare costs are about to hit their [highest levels in 15 years](https://www.mercer.com/en-us/insights/us-health-news/employers-prepare-for-the-highest-health-benefit-cost-increase-in-15-years/). And after years of “work from anywhere,” [companies are calling people back to the office](https://www.gallup.com/401384/indicator-hybrid-work.aspx).

Each of these trends on its own would be enough to spark change, but they’re converging to create one massive challenge that’s forcing employers to completely rethink how they structure compensation, benefits, and workforce strategy to control costs and stay competitive.

The companies that are figuring this out aren’t tackling these issues one by one. They’re realizing that all people spend is connected — your benefits choices impact your ability to compete for your talent, while your office policy affects your compensation needs.

To understand how these dynamics are playing out in real time, let’s turn to the numbers.

Here’s a closer look at how each of these factors is shaping compensation and benefits strategies, drawn from Sequoia’s [2025 Total Compensation and Benefits Market Insights](/content/resources/insights-reports/2025-total-comp-benefits-benchmark-report/index.html) report. The new resource compiles insights from nearly 2,000 investor-backed companies, representing more than 150,000 employees.

## AI is Redefining Roles and Reshaping Teams

Here’s the most brutal reality: If you’re competing for talent against AI companies, you’re probably losing. It’s not because they have deeper pockets. They’re playing by completely different rules.

Take [refresh equity](/content/2024/09/equity-refresh-grants/index.html), for example. According to Sequoia’s report, AI and machine learning companies are offering equity refreshes to non-executives much earlier than companies in other industries — often before they hit 100 employees. This highlights that AI and ML companies are thinking beyond attracting talent and are putting [retention strategies](/content/2025/03/employee-retention-strategies-2025/index.html) in place early, especially when mid-level engineers and research staff are as scarce and strategically valuable as leadership talent. The demand for AI expertise is so high that companies simply can’t afford to lose it.

## Healthcare Costs Are Climbing Fast

Healthcare has always been one of the most unpredictable components of people spend, and the next two years will be no exception. Mercer projects that even after cost-reduction measures, total [health benefits spend per employee will rise 6.5% in 2026](https://www.mercer.com/en-us/insights/us-health-news/employers-prepare-for-the-highest-health-benefit-cost-increase-in-15-years/) — the highest since 2010.

Many employers are already preparing by shifting costs to employees, tightening controls on high-demand specialty drugs, and rethinking plan design.

If you’re a smaller company, you’re getting hit the hardest. Companies with fewer than 100 employees are spending more on healthcare benefits relative to payroll, while larger employees are scaling back. This ties to hiring trends. Larger companies are moderating headcount or growing payroll faster than benefits spend, while smaller ones are investing in richer healthcare benefits to stay competitive, often because their salary and equity budgets are limited.

Here are some other ways companies are controlling healthcare costs, according to Sequoia’s report:

- 34% of companies with 500 to 999 employees increased employee premium contributions and cost sharing this year.
- 30% of companies with 1,000 to 2,499 employees added clinical controls on GLP-1 drugs to manage pharmacy costs. The percentage goes up to 46% for companies with a headcount over 2,500.

## Employees Are Heading Back to the Office

Remember when everyone was declaring in-office work dead? [Those days are gone](/content/2025/03/supporting-return-to-office-transitions/index.html). In 2025, 75% of companies with 500 to 999 employees now require in-office days, up 10% from the previous year. Fully remote work arrangements become rarer as companies grow, with only 5% of companies with more than 2,500 employees offering fully remote work arrangements.

Of those who require in-office days, smaller companies offer the most leeway — 57% of companies with fewer than 50 employees offer fully flexible schedules. As companies grow, they begin to mandate which days employees must work in the office. This is likely because smaller companies use workplace flexibility to compete against bigger companies who can draw and retain talent with bigger comp and benefits budgets.

## What Companies Are Doing to Ease the Pressure

Some companies are making surgical adjustments to balance market forces. Here’s how:

### Getting serious about pay equity early

According to our report, 80% of companies with under 100 employees have established pay ranges, up from 50% the previous year. As must-have tools for structuring fair and consistent pay, pay ranges help companies meet the demand for pay equity from both employees and regulators.

Another advantage: With pay ranges, companies can benchmark roles more effectively, helping them become more strategic about how they’ll target the market.

### Embracing flexible benefits

Lifestyle spending accounts (LSAs) are employer-funded accounts that reimburse employees for certain expenses such as childcare, gym memberships, or mental health apps.

Now offered by 28% of companies with 500 to 999 — up 10% from the previous year — LSAs are becoming a popular way to invest in employee health without committing to rising healthcare or vendor costs. They also simplify benefits management and give employees more flexibility to choose programs that matter most to them.

### Simplifying parental leave policies

In a move toward greater equity and simplicity in leave design, more companies are offering a single parental leave policy for all parents — birthing and non-birthing alike — with the same pay rate, duration, and eligibility.

In 2025, 59% of companies offer a single policy, compared to 55% in 2024, and 53% in 2023. While simplified policies help recruit and retain caregivers and mid-career talent, they’re also easier for companies to administer, freeing up resources for other programs.

### Get the Full Report

People spend accounts for over 75% of total expenses at most companies. Getting the balance of comp and benefits right doesn’t just improve employee satisfaction, it frees cash flow and affects your ability to raise funding and grow sustainably. The companies that adapt their people spend strategy to the new realities of the market won’t just survive 2025, they’ll turn it into a competitive advantage.

**To see all the data**, including insights on retirement and global wellbeing programs, download the [2025 Total Compensation and Benefits Market Insights](/content/resources/insights-reports/2025-total-comp-benefits-benchmark-report/index.html) report.

### Partner with Sequoia to Deliver on Your Promises to Your People and Investors

Sequoia’s expert compensation and benefits advisors provide our clients with hands-on and data-driven guidance to help them create scalable strategies for every level of growth. Want to find out how Sequoia can help your organization? [Talk to an advisor](/content/form/consultation/index.html) who is ready to answer your questions.

**More comp and benefits resources:**

- [Get access to Sequoia’s 2026 Compensation and Benefits Benchmarking Report](https://sequoiaconsulting.qualtrics.com/jfe/form/SV_eS5aIZdj5Pw34xg)
- [The Investor-Backed Guide to Executive Compensation](/content/resources/insights-reports/investor-backed-guide-executive-compensation/index.html)
- [2025 Benefits Benchmarking Report: Highlights for Mid-Size Companies](/content/2025/05/benefits-benchmarks-mid-size-2025/index.html)

\]\]>GRC Dashboards: Powering Smarter Security Operationshttps://www.sequoia.com/2025/09/grc-dashboards-powering-smarter-security-operations/

Tue, 30 Sep 2025 14:20:28 +0000https://www.sequoia.com/?p=59806Sequoia's Governance, Risk and Compliance (GRC) team uses data science to dynamically adapt to changes in the security industry. In this blog post we will explore how our GRC team has kept our security capabilities on pace with threat actor evolution as technologies improve, and how other GRC teams can apply our techniques.

The post [GRC Dashboards: Powering Smarter Security Operations](/content/2025/09/grc-dashboards-powering-smarter-security-operations/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Sequoia’s Governance, Risk and Compliance (GRC) team uses data science to dynamically adapt to changes in the security industry. In this blog post we will explore how our GRC team has kept our security capabilities on pace with threat actor evolution as technologies improve, and how other GRC teams can apply our techniques.

Enabling data visualization through dashboards gives us the ability to transform raw data into a clear picture of our risk posture, letting leadership and technical teams align on priorities quickly. This shared visibility turns scattered data into actionable insights.

For the entirety of the 21st century, there has been no lack of data across enterprise organizations. In fact, there has been more data created than people know what to do with. The common trope with data has been, “the more, the merrier.” But how can we use this data to gain significant and useful insights into our organization’s security posture?

We won’t walk through the Extract, Transform, and Load (ETL) process — the bread and butter of data engineering — because our focus is to highlight how Sequoia GRC has taken advantage of the ETL process to strengthen our organization’s overall security posture. In short, relatively recent innovations in data engineering now enable us to streamline our entire process.

Our goal was to create a reporting infrastructure that dynamically tracks datapoints across the organization and continuously updates itself. Essentially, we used our data as the basis for our new risk posture platform.

We introduced new engineering techniques into our processes for just this purpose. We began by identifying gaps in our past reporting practices. Once these were identified, we determined where all the data existed. Once the data was located, the previously mentioned ETL process came into play. We extracted and transformed our raw data, before loading the transformed data in our data warehouse.

Using multiple methods, we efficiently changed the raw data into relevant views that could be directly connected to our preferred visualization tools. For example, we may use Application Programming Interface (API) endpoints to extract data from their original sources. We use coding languages within specialized Integrated Development Environments (IDEs) to transform this data. Then we use our data warehouses to load and store the data (while ensuring strict adherence to retention and security requirements) in a format that is best suited for productivity and efficiency.

Finally, dashboards are created with our business intelligence tools using this refined data. Throughout this data process, we rely on Software as a Service (SaaS) platforms for specialized tools like ETL orchestration, version control, and visualization, while Infrastructure as a Service (IaaS) providers supply the scalable storage and compute power needed to handle large datasets securely. We consistently reassess the risks of these solutions to ensure that both our workflows and customer data remain resilient, compliant, and protected.

What sets our new dashboards apart is their ability to update in near real time, to provide tailored perspectives for different audiences, and to directly tie into compliance frameworks. This allows executives, auditors, and security engineers to each see through the lens most relevant to them without duplicate reporting effort.

So far, we have enhanced the organization’s ability to preemptively respond to risks stemming from vulnerabilities, patches, access management changes, configurations, sensitive data, audits, assets health, regulations, and more. Though there is much more work to be done, our work in this area has already led to vital remediations and visibility into previously opaque areas.

Each data stream we integrate follows a consistent lifecycle: once ingested, the information is analyzed against known risk indicators and compliance requirements. From there, dashboards flag anomalies, outdated configurations, or misaligned access privileges so that teams can prioritize fixes. For example, when dashboards reveal vulnerabilities, our engineers not only receive visibility but also track progress until remediation is confirmed. The same applies to monitoring sensitive data locations, regulatory alignment, and asset health. In this way, data is not just visualized; it drives action, ensuring that risks are identified, reported, and addressed before they escalate.

Over the next year, there are plans to expand our capabilities by automating all possible remediation processes. This shift to automation will free analysts from repetitive tasks and allow them to focus on higher-value risk analysis. Beyond Sequoia, we see these practices as a model for how other GRC teams can mature their reporting capabilities and better support business objectives.

All of this is part of our promise to always improve our risk posture and to always treat our customers’ data like it’s our own. We are committed to always going above and beyond when it comes to your privacy and security.

\]\]>Revised PFML Tax Credit Presents New Opportunities for Employers in 2026https://www.sequoia.com/2025/09/revised-pfml-tax-credit-presents-new-opportunities-for-employers-in-2026/

Tue, 23 Sep 2025 21:50:34 +0000https://www.sequoia.com/?p=59687The Internal Revenue Code (IRC) Section 45S offers a tax credit for eligible employers who offer paid family and medical leave (PFML) to qualifying employees. Although this credit has been available since 2017, many employers found it challenging to meet the original eligibility criteria and were unable to claim the credit.

The post [Revised PFML Tax Credit Presents New Opportunities for Employers in 2026](/content/2025/09/revised-pfml-tax-credit-presents-new-opportunities-for-employers-in-2026/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

[The Internal Revenue Code (IRC) Section 45S](/content/2021/04/irc-section-45s-paid-leave-tax-credit-extended-through-2025/index.html) offers a tax credit for eligible employers who provide paid family and medical leave (PFML) to qualifying employees. Although this credit has been available since 2017, many employers found it challenging to meet the original eligibility criteria and were unable to claim the credit.

However, the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduces substantial revisions to IRC Section 45S which may allow a broader range of employers to benefit from the tax credit. The revised provision takes effect **January 1, 2026**.

**Changes to the PFML Credit: Before and After OBBBA**

The OBBBA expanded and simplified the PFML tax credit by making it permanent, reducing the employee tenure requirement, and clarifying eligibility rules. These updates aim to help more employers qualify for the credit and ease compliance. The chart below highlights the key differences before and after OBBBA.

|     |     |     |
| --- | --- | --- |
| **Feature** | **Before OBBBA** | **After OBBBA (Effective Jan 1, 2026** |
| **Expiration Date** | Temporary (expires December 31, 2025) | Permanent |
| **Employee Tenure Requirement** | Employed at least 1 year | At least 1 year (or 6 months, at employer’s election) |
| **Minimum Leave Duration** | At least 2 weeks annually for full-time employees (prorated for part-time) | Same |
| **Leave Pay Requirement** | At least 50% of normal wages | Same |
| **Part-time Employee Eligibility** | Must offer prorated leave to part-time employees | Same, but defines part-time employees as working not less than 20 hours per week |
| **Qualifying Leave Types** | Only for specific family and medical reasons as defined under FMLA | Same |
| **Compensation Cap** | Not more than 60% of IRC Section 414(q)(1)(B) highly compensated employee limit (e.g., $96,000 in 2025) | Same |
| **Credit Calculation** | Based on PFML wages or paid leave under employer’s short-term disability program | Based on PFML wages or premiums for PFML insurance policy. Also, clearer rules for salaried/hourly conversion |
| **Leaves Required Under State and Local Law** | Excluded from calculating PFML tax credit amount and from counting toward amount of PFML provided by employer | Still excluded from tax credit calculation but now counts toward the amount of PFML provided by employer for purposes of determining eligibility. Also, credit is now available in all states, even those with PFML leave mandates. |
| **Employer Aggregation** | Employers are not aggregated for any purpose including calculating the credit. Each member of a controlled group of corporations and each member of a group of businesses under common control generally makes a separate election to claim or not to claim the credit. | Includes an aggregation rule that treats employers within the same controlled group under IRC section 414(b) and (c) as a single employer. |

**Eligibility Requirements**

To claim the credit, employers must adopt or update a written PFML policy that includes:

- PFML for employees employed at least 1 year (or 6 months, at the employer’s election).
- At least two weeks of annual PFML for full-time employees, paid at no less than 50% of their normal wages.
- Prorated leave for part-time employees (those who typically work 20 or more hours per week).
- Non-retaliation and non-discrimination provisions for employees exercising rights under the policy.

Employers cannot claim the credit for employees whose prior-year compensation exceeded 60% of the IRC Section 414(q)(1)(B) limit, prorated for part-time employees. For example, in 2026, the credit cannot be claimed for employees who earned more than $96,000 in 2025.

**Definition of PFML**

PFML must be provided for one or more of the following events, as defined under the Family and Medical Leave Act (FMLA):

- Birth and care of an employee’s child.
- Placement of a child with the employee for adoption or foster care.
- To care for the employee’s spouse, child, or parent who has a serious health condition.
- The employee’s own serious health condition.
- Any qualifying exigency due to an employee’s spouse, child, or parent being on covered active duty.
- To care for a service member who is the employee’s spouse, child, parent, or next of kin.

It’s important to note that other types of leave such as vacation, medical or sick leave, or personal leave (such as PTO), do not qualify. Leave required by state or local law does not count toward calculating the credit amount but does count toward the two-week minimum leave requirement.

**Credit Amount**

The credit is based on either a percentage of PFML wages paid by the employer or PFML premiums paid by the employer (under a PFML insurance policy), even if the employee does not use the leave. The base credit is 12.5%, increasing by 0.25% for each percentage point above 50% of normal wages paid. The maximum credit is 25% and applies to up to 12 weeks of PFML per employee.

The maximum PFML credit is limited to the number of hours of PFML provided, multiplied by the employee’s normal hourly wage rate. For salaried employees, this means converting their annual salary into an equivalent hourly rate.

Employers claiming the PFML credit must reduce their wage or salary deduction by the amount of the credit attributable to wages paid during the taxable year. Additionally, wages used to determine any other business credit cannot be used again for the PFML credit under IRC Section 45S.

**Aggregation Rule**

The OBBBA applies an aggregation rule that treats all employers within the same controlled group under IRC Sections 414(b) and (c) as a single employer for purposes of the tax credit. This means that every member of the controlled group must maintain a written PFML policy that satisfies the credit’s requirements.

However, an exception is available for employers that can demonstrate a substantial and legitimate business reason for not having a written policy. Acceptable reasons do not include the operation of a separate line of business, the rate of wages, the category of jobs, or the application of state and local PFML laws, but may include the grouping of employees of a common law employer.

**Remaining Challenges**

Despite the expanded eligibility, some hurdles remain. As previously mentioned, while state/local leave can help meet the two-week requirement, it must be excluded from the credit calculation. This may pose administrative challenges, especially in jurisdictions with complex paid leave laws. Also, the compensation cap may limit the number of employees (e.g., highly compensated individuals) for whom the credit can be claimed.

**Employer Action**

As the 2026 effective date approaches, employers should consider reviewing their current leave policies and compensation structures to determine whether they can take advantage of the revised PFML credit. With the credit now permanent, and more accessible under the OBBBA, proactive planning can help employers not only support their workforce but also realize meaningful tax savings. Consulting with legal and tax advisors now can ensure compliance and maximize the benefit of this enhanced tax incentive.

**Additional Resources**

- [26 U.S. Code § 45S – Employer credit for paid family and medical leave](https://www.law.cornell.edu/uscode/text/26/45S)
- [Section 45S Employer Credit for Paid Family and Medical Leave FAQs](https://www.irs.gov/newsroom/section-45s-employer-credit-for-paid-family-and-medical-leave-faqs)
- [H.R.1 – One Big Beautiful Bill Act, 119th Congress (2025-2026)](https://kpmg.com/kpmg-us/content/dam/kpmg/taxnewsflash/pdf/2025/05/kpmg-report-cab-one-big-beautiful-bill-may-15-2025.pdf)
- Sequoia Forewords:
  - [IRC Section 45S Paid Leave Tax Credit Extended Through 2025](/content/2021/04/irc-section-45s-paid-leave-tax-credit-extended-through-2025/index.html)
  - [IRS Releases Additional Guidance on the Paid Leave Tax Credit](/content/2018/10/irs-releases-additional-guidance-paid-leave-tax-credit/index.html)

\]\]>Employer Actions Required for Minnesota Paid Leave Program by December 1, 2025https://www.sequoia.com/2025/09/employer-actions-required-for-minnesota-paid-leave-program-by-december-1-2025/

Mon, 22 Sep 2025 20:07:24 +0000https://www.sequoia.com/?p=59683Minnesota has established a Paid Family and Medical Leave (PFML) program. Starting January 1, 2026, eligible employees in Minnesota will be able to take up to 20 weeks of paid leave with up to 12 weeks for a serious health condition and up to 12 weeks for family and safe leave. Employees can take both types of leave in the same year but cannot exceed 20 weeks total within a benefit year. The benefit year starts the first day an employee takes Paid Leave.

The post [Employer Actions Required for Minnesota Paid Leave Program by December 1, 2025](/content/2025/09/employer-actions-required-for-minnesota-paid-leave-program-by-december-1-2025/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Updated: December 8, 2025

Update: On October 1, 2025, Minnesota released a [Sample Employee Notice](https://mn.gov/deed/assets/paid-leave-notice-employee_tcm1045-707783.docx) that employers can use to notify employees about Paid Leave **by December 1, 2025**.

Minnesota has established a Paid Family and Medical Leave (PFML) program. Starting January 1, 2026, eligible employees in Minnesota will be able to take up to 20 weeks of paid leave with up to 12 weeks for a serious health condition and up to 12 weeks for family and safe leave. Employees can take both types of leave in the same year but cannot exceed 20 weeks total within a benefit year. The benefit year starts the first day an employee takes Paid Leave.

The PFML program is funded through employer and employee contributions. **Contributions also begin on January 1, 2026**. For 2026, the general premium is 0.88% of employee wages. After 2026, the premium rate will be set July 31 of the following year.

Here are important actions employers must take before the program begins:

**Designate Paid Leave Administrator and set up paid leave account**

Employers will need two separate accounts for MN PFML, one for submitting PFML premiums and one for leave administration. Employers will use their existing unemployment insurance account to submit quarterly wage reports, submit PFML premiums, and designate a Paid Leave Administrator. The first premiums will be due by **April 30, 2026**.

Employers will be required to create a new Paid Leave Administrator account on [paidleave.mn.gov](https://paidleave.mn.gov/) to review leave applications, see paid leave determinations, or request an equivalent plan substitution for 2026. Before an employer can create a Paid Leave Administrator account, they must designate a Paid Leave Administrator in their existing unemployment insurance account.

For more on setting up these accounts, see the [MN Paid Leave instructions](https://pl.mn.gov/employers/roles-and-responsibilities).

**Collect and remit PFML premiums**

Starting **January 1, 2026**, employers must begin collecting and remitting PFML premiums to the state.

**Employer Premium Rate:** For 2026, the premium rate is 0.88% (0.61% for Medical Leave and 0.27% for Family Leave), up to the Social Security’s Old-Age, Survivors, and Disability Insurance (OASDI) rate ($184,500 in 2026).

- **Employer and employee contributions**: Employers must contribute at least half of the premium but may choose to contribute more of the premium for some or all employees. For 2026, employers must contribute at least 0.44% of the premium (0.305% for Medical Leave and 0.135% for Family Leave) and can deduct 0.44% of the premium (0.305% for Medical Leave and 0.135% for Family Leave) from employee wages.

_For Sequoia One PEO clients: Beginning January 1, 2026, Sequoia One will begin collecting MN PFML premiums through a standard 0.44% employee payroll deduction and 0.44% employer contribution._

**Small Employer Rate**: Small employers are subject to a reduced premium rate, which will be 0.66% for 2026.

- **Employers eligible for small employer rate**: Employers will qualify for the small employer rate if they have 30 or fewer MN employees and average employee wages of 150% or less of the statewide average annual wage. The employee count is based on the highest number of employees reported on a single wage detail report in the last year.
- **Employer and employee contributions**: Employers eligible for the small employer rate are required to contribute a lower rate (it does not reduce the amount employers can deduct from employee wages). Employers must contribute at least 0.22% of the premium, meaning small employers can deduct up to 0.44% from employee wages.

Employers can use the [Premium Calculator](https://mn.gov/deed/paidleave/employers/premiums/) and review the [Premium FAQ](https://pl.mn.gov/common-questions#section-1246-funding-and-premiums) on the Minnesota Paid Leave website for further assistance.

**Set up equivalent private plan (optional)**

Employers have the option of setting up an equivalent private plan as an alternative to collecting and remitting PFML deductions to the state. Note that employers who are approved for an equivalent plan still have obligations under the law, including submitting quarterly wage detail reports and providing the required employee notice.

The plan can be purchased from private insurance or employers can provide equivalent coverage to employees directly (i.e., self insure). The equivalent plan must provide family and/or medical leave coverage that meets or exceeds the benefits provided through the state plan (i.e., duration of leave, weekly payments, it must allow intermittent leave, etc.) and must cost employees no more than they would pay under the state plan. If the equivalent plan only provides one type of leave, the employer must pay premiums to the state for the other type of leave.

Employers that want to offer an equivalent plan must request an Equivalent Plan Substitution through their Paid Leave Administrator Account and pay a processing fee. Employers can submit a request at any time; the state will review applications on a rolling basis. That said, employers should submit a request one quarter before they want the plan to take effect. Per the MN Paid Leave website, employers seeking to have a private plan alternative approved by January 1, 2026, should have applied no later than November 15, 2025.

_For Sequoia One PEO clients: Sequoia One will continue to collect and remit MA PFML premiums for clients with MN employees, regardless of whether they set up an equivalent private plan._

**Update workplace policies**

Employers will need to update their policy documents to reflect decisions made regarding:

- Notification requirements
- Attendance and call-out procedures
- Intermittent leave policies
- Coordination with other payments
- Coordination with other leaves

**Notify employees and obtain acknowledgements**

Employers are required to notify their workforce about Paid Leave in two ways:

1. **Hang a [workforce poster](https://mn.gov/deed/assets/paid-leave-mandatory-employer-poster-acc_tcm1045-700342.pdf)** in English and any language spoken by 5 or more employees or independent contractors
2. **Notify employees in their primary language and obtain employee acknowledgement of receipt**. Employers can use the [Model Notice](https://mn.gov/deed/assets/paid-leave-notice-employee_tcm1045-707783.docx) (in the applicable language).

- **Acknowledgement**: Employers can obtain acknowledgement by signing a form, acknowledging receipt electronically (e.g., via a payroll system), or another way the employer decides. If an employee refuses to provide an acknowledgement, employers should document how the employee was notified.
   - Employers should keep employee acknowledgements for their records. If an employee informs MN Paid Leave they were not notified, MN Paid Leave may request proof of the employer notice.
3. **Notify new hires within 30 days of hire.**

_For Sequoia One PEO clients: Sequoia One will incorporate the MN PFML notice into the new hire onboarding workflow beginning January 1, 2026._

For more information on the Minnesota Paid Family and Medical Leave Program, please review our Sequoia Foreword blog: [Minnesota Passes Paid Family and Medical Leave Law](/content/2023/07/minnesota-passes-paid-family-and-medical-leave-law/index.html).

\]\]>The Founder Mindset Shift: Why M&A Is the New IPOhttps://www.sequoia.com/2025/09/founder-exit-strategy/

Wed, 17 Sep 2025 15:38:32 +0000https://www.sequoia.com/?p=59643As IPOs become elusive, founders are rethinking success. Discover why M&A is emerging as a strategic exit for growth-stage startups, and how private equity is reshaping the path to liquidity.

The post [The Founder Mindset Shift: Why M&A Is the New IPO](/content/2025/09/founder-exit-strategy/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

For decades, the IPO has been the finish line that defines success for VC-backed founders. Going public signaled that a company had “made it.” It was a reward for years of hard work and risk-taking.

Sometimes, it still is. Figma’s recent IPO was widely celebrated, not just for its successful debut, but for the rare glimmer of hope it offered to other late-stage startups. Yet as encouraging as that moment was, it didn’t reopen the IPO window for most companies. For the majority of growth-stage founders, the dream of ringing the bell remains out of reach.

So, the question looms: _If not IPO, then what?_

## From Disruptors to Integrators

Many VC-backed companies begin with a disruption story and an aim to reinvent an industry. But as they scale, their value often lies not in dismantling incumbents, but in enhancing them.

This is where the founder mindset shift begins. Success today is less about standing alone as a category creator and more about becoming an indispensable piece of an established ecosystem. Founders are reframing their role from changing a space to building something that makes it work better.

That’s why M&A, once seen as a compromise, is increasingly the strategic path forward.

## The Pressure for Liquidity

Growth-stage founders are facing intense pressure. After years of extended holding periods, funds are eager to return capital to limited partners, leaving leadership teams acutely aware of the clock. Boards amplify that urgency, demanding clearly defined exit strategies in a market where IPOs are increasingly scarce. Meanwhile, employee equity, once a powerful retention tool, loses its potency when liquidity remains elusive.

## M&A as a Strategic Exit

In response to these pressures, many founders are viewing M&A not as a fallback, but as a proactive path to scale and liquidity. Rather than waiting for an IPO that may never come, they’re recognizing that selling to a larger platform can deliver liquidity while accelerating a company’s impact.

Recent examples include [Wiz’s $32 billion acquisition](https://www.cnbc.com/2025/03/18/google-to-acquire-cloud-security-startup-wiz-for-32-billion.html#:~:text=Google%20to%20acquire%20cloud%20security%20startup%20Wiz,$12.5%20billion%20purchase%20of%20Motorola%20in%202012.) by Google (currently under [antitrust review](https://www.bloomberg.com/news/articles/2025-06-13/google-s-plan-to-buy-security-firm-wiz-gets-antitrust-review)), Moveworks’ $2.85 billion [sale](https://www.investors.com/news/technology/servicenow-stock-acquire-ai-startup-moveworks/#:~:text=CEO%20McDermott%20Expands%20Products,leverage%20large%20installed%20customer%20bases.) to ServiceNow, and [Neon’s $1 billion sale](https://techcrunch.com/2025/05/14/databricks-to-buy-open-source-database-startup-neon-for-1b/)  to Databricks. These deals remind us that M&A is a trajectory, not an endpoint.

## The Rise of Private Equity

Private equity firms are increasingly playing a central role in growth-stage exits, providing capital and strategic guidance. Unlike traditional acquisitions, PE-backed deals often involve close collaboration on operations, helping founders scale while preserving their core vision.

By partnering with a PE firm, companies can extend their runways, provide liquidity for early investors and employees, and pursue growth initiatives that might be challenging to fund independently. For founders, private equity offers an alternative path to liquidity that balances immediate needs with long-term ambitions.

## Looking Ahead: Rethinking Success

For today’s founders, the finish line looks different than it was a decade ago. IPOs remain aspirational, but they’re not the only marker of success. The challenge now is to embrace this new reality and tell a different story — one where integration and partnership can create as much value as independence.

The founder mindset shift is about seeing M&A not as a lesser outcome, but as a strategic choice that can deliver liquidity, extend impact, and ensure that what you’ve built continues to grow, even if it’s not on the public markets.

## Let’s Talk About What Comes Next

Whether you’re a founder shaping your next chapter or a CFO planning for liquidity, your comp and benefits strategy should support the outcomes you’re working toward. [Connect with a Sequoia advisor](/content/form/consultation/index.html) to align your programs with the path ahead.

**Related:**

[Is Computer Science the New Liberal Arts Degree?](/content/2025/07/ai-and-engineering-jobs/index.html)

[Cyber Liability Risk in the Age of AI: Smarter Tools, Higher Stakes](/content/2025/09/cyber-liability-risk/index.html)

[Executive Compensation in 2025: Data and Insights from Sequoia and Carta’s Exclusive Partnership](/content/2025/08/executive-compensation-in-2025-data-and-insights-from-sequoia-and-cartas-exclusive-partnership/index.html)

[The Investor-Backed Guide to Executive Compensation](/content/resources/insights-reports/investor-backed-guide-executive-compensation/index.html)

\]\]>Cyber Liability Risk in the Age of AI: Smarter Tools, Higher Stakeshttps://www.sequoia.com/2025/09/cyber-liability-risk/

Mon, 15 Sep 2025 17:20:18 +0000https://www.sequoia.com/?p=59625How AI Is Reshaping Cyber Liability Risk and Risk Management \| Sequoia. From smarter defenses to new exposures, AI is transforming how companies manage cyber liability risk. Learn how to strengthen governance, insurance strategy, and employee readiness.

The post [Cyber Liability Risk in the Age of AI: Smarter Tools, Higher Stakes](/content/2025/09/cyber-liability-risk/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Not long ago, phishing emails were easy to spot. The language was clumsy, the tone felt off, and the sender’s address gave it away.

Those signals are fading fast. Bad actors now use AI to craft messages that are polished, persuasive, and harder than ever to detect.

AI is also transforming [how companies manage risk](/content/2025/08/risk-management-is-a-story-worth-telling/index.html). It flags anomalies in network traffic, predicts attacks before they happen, and streamlines compliance processes that once took weeks. It’s even making training more engaging through realistic simulations and phishing drills. In short, AI is helping organizations move from reactive defense to proactive resilience.

But the same technology that helps us can hurt us. The tools that strengthen defenses also enable more sophisticated threats. Generative AI is already powering phishing campaigns convincing enough to mimic someone’s voice and speaking style. Deepfakes are so realistic they can fool seasoned professionals. And AI-powered attacks don’t need a human operator. They can scale at machine speed.

The legal and financial implications are enormous. Consider Google and Meta, which recently agreed to pay $1.4 billion each to settle claims about how they collected and used personal data without permission. Those cases weren’t about AI, but they underscore a critical point: When technology outpaces governance, the cost of getting it wrong can be staggering.

## Managing Cyber Liability Risk with Governance

For risk and legal leaders, the rise of AI means it can’t be handled in isolation. Governance must be coordinated — risk, legal, IT, and the C-suite working together to set policies, monitor usage, and educate employees.

Shadow AI, tools adopted without IT approval, is a growing blind spot. Do you know where AI already lives in your workflows?

Insurance can help, but most cyber liability policies weren’t designed with AI in mind. Carriers are already asking tougher questions. If your finance team relies exclusively on AI for audits and an error slips through, will your policy respond? Maybe not. Some insurers are exploring AI-specific exclusions or requiring proof of human oversight for sensitive processes. It’s a “wait and see” moment, but the direction is clear: Coverage terms will evolve as AI becomes more entrenched in business operations.

## Five Ways to Strengthen Your Cyber Liability Risk Strategy

AI brings enormous potential and equally significant risk. Here are five steps you can take now to strengthen your defenses:

#### 1\. Audit your AI use

Map where AI is in play across your organization, both officially and unofficially. Shadow AI is real, and employees often adopt tools without IT approval, creating blind spots that can lead to security vulnerabilities and compliance gaps. Make this a cross-functional effort with input from risk, legal, and IT.

#### 2\. Update your governance framework

Define accountability. Policies should clearly define how data privacy, model integrity, and human oversight are managed. Assign roles and responsibilities: Who approves AI use? Who monitors compliance? Who owns the response plan if something goes wrong?

Employees need clear guidance, too. Establish an Acceptable Use Policy that defines how AI tools should be used responsibly and require all employees to review and acknowledge it annually to reinforce their role in helping protect the company.

#### 3\. Engage your carrier early

Don’t wait for renewal to ask hard questions. Ask now how your policy responds to AI-related incidents. Are there exclusions for automated decision-making? Do you need endorsements for risks like adversarial attacks or data poisoning? The answers may surprise you, and they’ll shape your risk strategy.

#### 4\. Invest in workforce education

Technology alone won’t protect you. Employees are your first line of defense. Regular phishing simulations, deepfake awareness training, and clear escalation protocols can dramatically reduce your exposure.

#### 5\. Benchmark and reassess annually

Your cyber policy is locked in for a year, but your risk profile isn’t. If you’ve added new AI-driven processes or taken on more sensitive data, your coverage may no longer fit. Benchmark against peers and review your limits and retentions regularly.

## Securing the Future

AI isn’t going away and neither are the risks. The companies that thrive will embrace AI’s potential while managing its downsides. This requires thoughtful integration, anticipating potential pitfalls, and building organizational resilience at every level.

If you’d like a partner in navigating [AI and other evolving risks](/content/risk/index.html), just reach out to our team at Sequoia — [we’re here to help](/content/form/consultation/index.html).

**Related:**

- [Risk Management Is a Story Worth Telling](/content/2025/08/risk-management-is-a-story-worth-telling/index.html)
- [Travel Risks: Why Employers’ Duty of Care Doesn’t Take Holidays](/content/2025/11/duty-of-care-risk-strategy/index.html)
- [Are You Really Covered? Why General Liability Isn’t Enough for Third-Party Risk](/content/2025/10/third-party-liability/index.html)

\]\]>\[Updated\] Massachusetts Passes New Pay Transparency Lawhttps://www.sequoia.com/2025/09/massachusetts-passes-new-pay-transparency-law-updated/

Mon, 15 Sep 2025 04:24:00 +0000https://www.sequoia.com/?p=51956On July 31, 2024, Massachusetts (MA) joined the growing number of states that require employers to disclose the pay range on job postings and to employees and applicants. The new MA law also requires large employers to submit annual pay data reporting.

The post [\[Updated\] Massachusetts Passes New Pay Transparency Law](/content/2025/09/massachusetts-passes-new-pay-transparency-law-updated/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Updated September 15, 2025: The date when employers must begin posting pay ranges on job postings was updated from July 1, 2025 to October 29, 2025.

On July 31, 2024, Massachusetts (MA) joined the growing number of states that require employers to disclose the pay range on job postings and to employees and applicants. The [new MA law](https://malegislature.gov/Bills/193/H4890) also requires large employers to submit annual pay data reporting.

## Compliance Snapshot

- **Pay Ranges on Job Postings: Beginning October 29, 2025**, employers with 25 or more MA employees must disclose the salary range on job postings and to employees and applicants.
- **Pay Data Reporting: Beginning February 1, 2025**, and annually thereafter, private employers with 100 or more MA-based employees must submit copies of their federal EEO-1 reports to the State Secretary.

## Pay Ranges on Job Postings

Beginning on October 29, 2025, employers with 25 or more MA employees must disclose the pay range in the following scenarios:

- **Job Postings**: Disclosure is required on any ad or job posting intended to recruit job applicants (includes any posting made directly by the employer or through a third party).
- **Internal Promotion/Transfer**: Disclosure is required to employees who are offered a promotion or transfer to a new position with different job responsibilities.
- **Upon Request**: The pay range for a particular position must be disclosed to employees holding such position, and to applicants of the position, upon request.

The law defines the “pay range” as “the annual salary or hourly wage range that the covered employer reasonably and in good faith expects to pay for the position at that time.” Importantly, unlike some other state requirements, the MA law does not require the disclosure of other benefits (e.g., healthcare benefits, commissions, etc.).

Notably, the law does not address whether the disclosure applies to remote positions or positions that can be filled by MA employees.

## Pay Data Reporting

A unique provision of the new law is the requirement for large employers to submit pay data reporting to the state. Private employers are subject to this reporting requirement if they had 100 or more employees in MA at any time during the prior calendar year and are subject to federal EEO-1 reporting.

As background, private employers with 100 or more employees are required to annually submit federal EEO-1 reporting to the Equal Employment Opportunity Commission (EEOC). Currently, the EEO-1 reports only require employers to submit employee demographic information (e.g., race, ethnicity, sex) and do not require pay data information.

Nonetheless, covered employers can comply with the MA reporting requirements by submitting a copy of their federal EEO-1 report to the MA State Secretary. The first report must be submitted no later than February 1, 2025. Private covered employers must submit EEO-1 reports annually by February 1st, while union and public employers must submit their EEO reports every other year.

## Potential Penalties

Non-compliant covered employers will be warned for the first offense and may be subject to a fine of up to $500 for the second offense and a fine of up to $1,000 for the third offense.

## Employer Action

Though the new MA requirements don’t go into effect until 2025, employers with MA employees should start developing a plan to comply with the disclosure requirements. For administrative ease, employers subject to other state/local pay disclosure requirements may want to consider adopting a universal approach to job postings that complies with all state requirements.

## Additional Resources

- [An Act Relative to Salary Range Transparency](https://malegislature.gov/Bills/193/H4890)
- [Pay Transparency in Massachusetts](https://www.mass.gov/info-details/pay-transparency-in-massachusetts)
- [MA Pay Transparency FAQ](https://www.mass.gov/info-details/pay-transparency-in-massachusetts#pay-transparency-faq)

\]\]>\[Updated\] Supreme Court Upholds ACA Preventive Care Mandateshttps://www.sequoia.com/2025/09/supreme-court-upholds-aca-preventive-care-mandates-updated/

Tue, 09 Sep 2025 08:33:00 +0000https://www.sequoia.com/?p=56730On June 27, the U.S. Supreme Court issued its decision in Kennedy v. Braidwood Management Inc., affirming the authority of the U.S. Preventive Services Task Force (USPSTF) to issue preventive care recommendations. As a result, the Affordable Care Act (ACA) mandate requiring employer-sponsored group health plans to cover certain preventive services without cost-sharing remains in effect.

The post [\[Updated\] Supreme Court Upholds ACA Preventive Care Mandates](/content/2025/09/supreme-court-upholds-aca-preventive-care-mandates-updated/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

**Update 9/5/2025**: In response to the Supreme Court’s Braidwood [decision](https://www.supremecourt.gov/opinions/24pdf/24-316_869d.pdf) (discussed below), the Fifth Circuit Court of Appeals has remanded the case to the original trial court to now evaluate whether the Health Resources and Services Administration (HRSA) and the Advisory Committee on Immunization Practices (ACIP) have the legal authority to issue preventive care recommendations. While the Supreme Court confirmed the authority of the U.S. Preventive Services Task Force (USPSTF) in the Braidwood decision, the appointment processes for HRSA and ACIP are now being challenged, which could ultimately impact preventive service coverage required by the Affordable Care Act (ACA). Despite the continued litigation, the ACA’s preventive services mandate continues to apply.

Original Article:

On June 27, the U.S. Supreme Court issued its [decision](https://www.supremecourt.gov/opinions/24pdf/24-316_869d.pdf) in _Kennedy v. Braidwood Management Inc._, affirming the authority of the U.S. Preventive Services Task Force (USPSTF) to issue preventive care recommendations. As a result, the Affordable Care Act (ACA) mandate requiring employer-sponsored group health plans to cover certain preventive services without cost-sharing **remains in effect**.

## Background

_Kennedy v. Braidwood Management Inc_. challenges the constitutionality of the USPSTF, whose recommendations for preventive care with an “A” or “B” rating – including services such as screenings, counseling, vaccinations, and preventive medications – must be covered by most group health plans (and in all marketplace health insurance plans) under the ACA without cost-sharing. The central issue in the case was whether the USPSTF has the constitutional authority to issue binding recommendations that require employer-sponsored health plans to cover these services without copayments or coinsurance.

Initially, U.S. District Court for the Northern District of Texas decided that the USPSTF had no constitutional authority to mandate that private insurance cover different preventive services, which led to several appeals before the Supreme Court took up the case in February 2025. The core of the argument rested on the Appointments Clause, which requires that officers of the United States who make decisions that would affect the public be appointed by the President and confirmed by the Senate. The members of the USPSTF, however, were not appointed through this process. That said, the Supreme Court narrowly examined whether the structure of the USPSTF violated the Constitution’s Appointments Clause.

## _Kennedy v. Braidwood Management Inc. Decision_

In the landmark decision, the Supreme Court upheld the ACA’s preventive services mandate, affirming that group health plans must continue to cover preventive services without cost-sharing. The Court ruled that the USPSTF operates constitutionally, with its members properly appointed as “inferior officers” by the Secretary of Health and Human Services (HHS). The Supreme Court emphasized that these members are removable at will and that their recommendations are subject to review by the Secretary before taking effect, ensuring both accountability and oversight.

Justice Thomas, joined by Justices Alito and Gorsuch, dissented, arguing that the Secretary lacked proper statutory authority to appoint USPSTF members and that the USPSTF operates with too much independence to be considered subordinate.

## Employer Takeaways

As a result of the Supreme Court’s decision, there are no changes to the preventive service mandates required under the ACA. Meaning, employer-sponsored group health plans must continue to provide coverage for certain preventive services without cost-sharing. While the status quo remains in place for plan sponsors and insurers for now, Sequoia will continue to monitor any future developments and communicate updates, as applicable.

## Additional Resources

- [Kennedy v. Braidwood Management Inc. Decision](https://www.supremecourt.gov/opinions/24pdf/24-316_869d.pdf)

[Connect with a Sequoia consultant](/content/form/consultation/index.html) to learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions. And if you’re already a Sequoia client, stay on top of your employer obligations with [your Compliance Checklist](https://admin.sequoia.com/connect?_gl=1*1kg2r29*_gcl_au*ODAwMDI1NDA2LjE3MTkyMzc2MDE.) that highlights important compliance dates, action items, and resources.

\]\]>Illinois Expands Dependent Coverage Requirements for Fully Insured Health Planshttps://www.sequoia.com/2025/08/illinois-expands-dependent-coverage-requirements-for-fully-insured-health-plans/

Thu, 28 Aug 2025 16:32:14 +0000https://www.sequoia.com/?p=57385Beginning January 1, 2026, Illinois House Bill 5258 introduces a significant change to the Illinois Insurance Code, the Health Maintenance Organization Act and the Limited Health Service Act. The new amendment requires that fully insured health plans issued in Illinois must extend coverage to eligible dependent parents and stepparents of insured individuals, provided they reside within the health plan’s service area.

The post [Illinois Expands Dependent Coverage Requirements for Fully Insured Health Plans](/content/2025/08/illinois-expands-dependent-coverage-requirements-for-fully-insured-health-plans/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Beginning January 1, 2026, Illinois House Bill 5258 introduces a significant change to the Illinois Insurance Code, the Health Maintenance Organization Act and the Limited Health Service Act. The new amendment requires that fully insured health plans issued in Illinois must extend coverage to eligible dependent parents and stepparents of insured individuals, provided they reside within the health plan’s service area.

To qualify for coverage, a parent or stepparent must meet the IRS definition of a “qualifying relative” under 26 U.S. Code § 152(d). This includes four specific criteria:

- The individual must have a qualifying relationship to the taxpayer (such as being a parent or stepparent);
- Their gross income for the calendar year must be **less than the exemption amount**, which is $5,050 for 2025;
- The taxpayer must provide **more than half** of the individual’s total financial support during the year; and
- The individual must not be the qualifying child of the taxpayer or of any other taxpayer for that same year.

This coverage requirement applies to health insurance policies issued, amended, delivered, or renewed in Illinois on or after **January 1, 2026**. It does not apply to policies issued in other states, even if the employer has employees living or working in Illinois. The law also excludes self-funded (and level-funded) plans, as well as specialized health care service plans, Medicare supplement policies, hospital-only policies, accident-only policies, and specified disease insurance policies.

## Employer Action

Employers sponsoring fully insured group health plans in Illinois should begin preparing for this change. This includes reviewing plan documents with carriers to ensure compliance and updating communications and internal systems to verify dependent eligibility. In practical terms, employers will need to determine how they will administer enrollment for dependent parents and stepparents. This may involve requiring employees to submit an attestation form or affidavit confirming that the dependent meets the above-listed IRS criteria. Employers should also clearly communicate the income limits and support requirements to employees during open enrollment and onboarding to ensure that only qualifying relatives are enrolled on the plans.

## Additional Resources

- [HB 5258](https://www.ilga.gov/documents/legislation/103/HB/10300HB5258.htm)

\]\]>Executive Compensation in 2025: Data and Insights from Sequoia and Carta’s Exclusive Partnershiphttps://www.sequoia.com/2025/08/executive-compensation-in-2025-data-and-insights-from-sequoia-and-cartas-exclusive-partnership/

Fri, 22 Aug 2025 21:29:22 +0000https://www.sequoia.com/?p=57304In 2025, VC-backed companies are operating under tighter timelines and heightened investor scrutiny. Liquidity events are rare, and investors expect faster results. That’s why Sequoia and Carta — through their expanded strategic partnership — came together to host a conversation about the state of compensation and benefits today. Sequoia, the premier total compensation and benefits advisory firm for investor-backed companies, now leverages Carta’s full private market dataset to deliver custom, real-time compensation benchmarks tailored to each company’s stage, industry, and funding environment.

The post [Executive Compensation in 2025: Data and Insights from Sequoia and Carta’s Exclusive Partnership](/content/2025/08/executive-compensation-in-2025-data-and-insights-from-sequoia-and-cartas-exclusive-partnership/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

In 2025, VC-backed companies are operating under tighter timelines and heightened investor scrutiny. Liquidity events are rare, and investors expect faster results. That’s why Sequoia and Carta — [through their expanded strategic partnership](/content/news/sequoia-carta-exclusive-partnership/index.html) — came together to host a conversation about the state of compensation and benefits today. Sequoia, the premier total compensation and benefits advisory firm for investor-backed companies, now leverages Carta’s full private market dataset to deliver custom, real-time compensation benchmarks tailored to each company’s stage, industry, and funding environment.

In a recent conversation, Kyle Holm, vice president of compensation at Sequoia, and Josh Steinfeld, principal product strategist at Carta, shared what market conditions mean for executive pay — and how companies can adjust their strategies to meet the moment. Their insights offer both context and actionable advice for founders, CFOs, talent leaders, and investors.

Read on to see highlights from the conversation. (Or [access the full conversation and insights](/content/event/rethinking-executive-compensation-with-sequoia-carta/index.html)).

## What’s Shaping Executive Compensation Today

[Executive pay strategies](/content/resources/insights-reports/investor-backed-guide-executive-compensation/index.html) don’t exist in a vacuum. They’re being shaped by a changing market environment:

- **Limited exits and anxious investors**: Even with notable IPOs like Figma, liquidity options are narrow, putting more pressure on leadership teams to deliver.
- **Shorter windows for success**: Executives now have roughly three to five years to prove out company value before facing investor impatience.
- **Capital constraints:** Tight runways are forcing companies to make tough choices around hiring, benefits, and equity.

“Companies are having to make challenging trade-offs when it comes to the talent they have to have and the talent they need to defer,” said Holm. “Cash and equity timelines are shaping how they think about pay and benefits.”

## Talent Trends to Watch

With the pressures noted above in mind, companies are rethinking how they attract and retain leadership. Here are some key trends:

- **Hiring is steady but flat**. Early 2025 saw the lowest January hiring numbers in seven years, following a surge in 2021–22. Industries like gaming and education are contracting due in part to AI, while hardware and medical devices still need hands-on talent.
- **Equity as a retention tool is harder to manage**. Without a clear liquidity path, [equity awards](/content/2024/08/executive-equity-compensation/index.html) carry more risk for executives. “The startup market and the broader market are starting to look the same,” said Steinfeld. “We’re seeing flatter org charts, with VP titles used less frequently at early stages.”
- **Salaries are rising again**. Across roles, salaries climbed about 2% in 2024, returning to more typical annual increases of 3.5% to 4.5%. Executives saw modest gains, while VP equity dropped slightly. “Equity benchmarks essentially fell off a cliff during the labor market cooldown and are only slowly coming back,” Steinfeld noted.

## Emerging Strategies for Executive Pay

To stay competitive, companies are exploring new strategies that reflect the realities of today’s market. These approaches are still evolving but signal where compensation is heading:

**Performance-based equity**: More late-stage private companies are considering tying equity to measurable milestones, but adoption remains low. Fewer than 10% of private companies are using this structure, but interest is growing as boards seek stronger alignment between pay and outcomes.

“Designing performance equity programs takes time and care, and many companies lack clear milestones,” said Holm. “But for those that do, it’s a way to ensure executives are rewarded for driving the metrics that matter most.”

**Founder refresh**: Founder [equity refreshes](/content/2024/09/equity-refresh-grants/index.html) are some of the most nuanced decisions a board can make. They are highly case-specific, balancing future contributions with dilution concerns. “Founder refreshes are the snowflakes of compensation design — no two are alike,” said Holm.

**Rising AI pay**: Demand for AI leaders is spiking. Private companies are paying more, with salaries up around 7% and equity up 25% over last year. Early-stage companies are feeling this most, competing against deep-pocketed tech giants and needing to be creative with offers.

## Working With Your Board

All of these trends play out in the boardroom, where compensation and equity decisions are made. To manage those discussions effectively:

- **Own the calendar**. Set the agenda for comp discussions and help board members prepare. Pre-meeting conversations go a long way toward alignment.
- **Bring fresh data**. “Having conversations informed by data is invaluable,” said Steinfeld. “It’s exciting to bring these insights to startups, where historically decisions were based on anecdotes.”
- **Stay ahead of questions**. Expect conversations about equity, burn rates, and key roles. “Your advisor should bring proactive guidance,” Holm added. “Relying on year-old data won’t cut it.”

[Access a recording of the full conversation](/content/event/rethinking-executive-compensation-with-sequoia-carta/index.html).

## How Sequoia and Carta Can Help

To meet these challenges, companies need more than generic benchmarks. That’s where Sequoia and Carta combine forces. The partnership blends Carta’s private market data with Sequoia’s advisory expertise, giving companies:

- Custom benchmarks: Peer group analysis specific to your industry, stage, and roles.
- Equity clarity: Data-driven guidance for equity structures and burn rates.
- Strategic programs: Tailored strategies to attract and retain top leaders

Ready to get started? Fill out a quick form to [connect with an expert Sequoia advisor](/content/lp/carta/index.html) and learn how your company can benefit from a modern approach to comp advisory.

**Related**:

- [Is Computer Science the New Liberal Arts Degree?](/content/2025/07/ai-and-engineering-jobs/index.html)
- [Top 6 Equity Refresh Grant Trends for Tech Companies in 2025](/content/2025/04/equity-refresh-trends-2025/index.html)
- [The Investor-Backed Guide to Executive Compensation](/content/resources/insights-reports/investor-backed-guide-executive-compensation/index.html)

\]\]>Updated: WA Cares Fund Update: Key Compliance Insights for Employershttps://www.sequoia.com/2025/08/wa-cares-fund-update-key-compliance-insights-for-employers/

Mon, 18 Aug 2025 13:44:40 +0000https://www.sequoia.com/?p=57239Washington State significantly amended the WA Cares Fund with the passage of SB 5291 on May 20, 2025. The law expands eligibility through three contribution pathways, allows previously exempt employees to rejoin the program, and permits out-of-state workers to maintain coverage. It also introduces automatic exemptions for active-duty military and temporary visa holders, authorizes supplemental private LTC insurance and ensures annual benefit adjustments for inflation. These changes, effective January 1, 2026, have important implications for payroll, benefits strategy and compliance.

The post [Updated: WA Cares Fund Update: Key Compliance Insights for Employers](/content/2025/08/wa-cares-fund-update-key-compliance-insights-for-employers/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Updated on December 23, 2025

Washington State significantly amended the WA Cares Fund with the passage of SB 5291 on May 20, 2025. The law expands eligibility through three contribution pathways, allows previously exempt employees to rejoin the program, and permits out-of-state workers to maintain coverage. It also introduces automatic exemptions for temporary visa holders, authorizes supplemental private LTC insurance and ensures annual benefit adjustments for inflation. These changes, effective January 1, 2026, have important implications for payroll, benefits strategy and compliance.

## Compliance Snapshot

- Employers **are not** required to contribute to the WA Cares Fund but must collect a 0.58% payroll deduction from Washington employees’ wages (with no cap) and remit premiums to the Employment Security Department.
- Premium collection began July 1, 2023. Employers must track and retain exemption records.
- Employees who secured private LTC insurance before November 1, 2021, and applied for an exemption by January 1, 2023, are exempt, but may opt back into the program before July 1, 2028.
- Employers should ensure payroll systems and reporting processes are updated.

## Background

In 2019, Washington State established the WA Cares Fund, the nation’s first mandatory, publicly funded long-term care insurance program. Funded by a 0.58% payroll deduction, premium collection began July 1, 2023. Benefits of up to $36,500 (adjusted annually for inflation) will be available **starting July 2026** to eligible individuals needing assistance with daily living.

Senate Bill 5291, signed May 20, 2025, introduced major reforms **effective January 1, 2026**, including expanded eligibility pathways, opt-in options for previously exempt employees, out-of-state coverage continuation, and a framework for supplemental private LTC insurance. Employers should audit payroll systems for compliance with updated WA Cares reporting and premium collection rules, identify employees eligible for new exemptions or opt-in opportunities and evaluate offering supplemental long-term care insurance as part of a competitive benefits strategy.

## Frequently Asked Questions

WA Cares Fund requires employers to collect a 0.58% payroll deduction from Washington employees and remit premiums to the Employment Security Department. While employers do not contribute directly, they must maintain exemption records and comply with quarterly reporting requirements. Premium collection began July 1, 2023.

#### Who is eligible for benefits under the Program?

Employees over the age of 18 may qualify for benefits if they need assistance with at least three activities of daily living and meet one of three contribution pathways:

- Contributed for at least 10 years (no longer requiring five consecutive years), with 500+ hours annually.
- Contributed for 3 of the last 6 years, with 500+ hours annually.
- Contributed for at least 3 years and elected to continue coverage after relocating out of Washington.

#### How is the Program funded?

The Program is funded through a “premium assessment” (i.e., tax) on employee wages beginning **July 1, 2023**. The rate is 0.58% of wages, with no cap. The rate may be adjusted biennially to maintain program solvency. _For example, 0.58% of a $100,000 salary would be $580.00. This equates to $0.58 for every $100 of earnings._

#### Are employers required to contribute to the Program?

No, employers **are not** required to contribute to the Program, though they are required to collect premiums from employees and remit them to Washington State ESD, as outlined below.

#### What are employers required to do?

Beginning **July 1, 2023**, employers (including out-of-state employers) must:

- Collect premiums each pay period through a payroll deduction equal to 0.58% of employees’ wages (employers are not required to take payroll deductions for exempted employees);
- Remit employee payroll deductions to the ESD quarterly (which are due by the last day of the month following the end of the calendar quarter being reported);
- Retain written notifications of employee exemptions; and
- Monitor eligibility for automatic exemptions and opt-in opportunities.

**Notice Requirements**: While formal notice is not currently required, employers should proactively inform employees about WA Cares deductions and benefits.

#### Which employees are subject to the tax?

All employees employed in Washington are subject to the tax. Employees are considered “employed in Washington” if their:

- services are performed in Washington; or
- services are not localized in any state, but some services are performed in Washington **and** the employee bases their operations or directs services from Washington (or, if there is no state where the employee bases their operations or directs services, the employee resides in Washington).

Employees subject to a collective bargaining agreement in existence on October 19, 2017, and self-employed individuals are not subject to the tax (unless self-employed individuals choose to opt into the Program).

#### What wages are subject to the tax?

The tax applies to all wages and renumeration, including salary and hourly wages, stock-based compensation, commissions, bonuses, holiday pay, most paid time off, and severance pay. There is **no cap** on the amount of wages in which the tax applies.

#### Can employees apply for an exemption to the tax?

Employees may be exempt from WA Cares payroll deductions under the following conditions:

- **Private LTC Insurance**: Employees who purchased qualifying long-term care insurance before November 1, 2021, and applied for an exemption by December 31, 2022. These individuals may opt back into the program before July 1, 2028.
- **Live Outside Washington**: Employees whose primary residence is outside Washington may apply for an exemption.
- **Spouses or Domestic Partners of Active-duty Military**: Automatically exempt.
- **Active-Duty Military in Civilian Jobs**: May apply for an exemption starting January 1, 2026. Must cancel exemption within 90 days of discharge.
- **Temporary Visa Holders**: Starting January 1, 2026, an employee who holds a nonimmigrant visa for temporary workers is automatically exempt unless they notify their employer they would like to opt in. Individuals become subject to the program upon gaining permanent residency or citizenship.
- **Veterans with 70%+ Service Connected Disability**: Permanently exempt.

#### Can employers apply for an exemption?

No, employers cannot apply for an exemption on behalf of employees, even if they offer long-term care insurance. Only employees can apply for an exemption.

#### How do employers know if an employee is exempt?

Exempted employees are required to provide written notification to all current and future employers to notify them of their exemption. Exemptions will take effect on the first day of the quarter after the exemption is approved and employees cannot receive refunds premiums paid prior to the exemption.

#### What are employers’ obligations with respect to exempted employees?

Employers are not required to take payroll deductions for exempted employees after they are notified of the exemption. Employers are required to retain written notifications of exemptions for six years.

If an exempted employee does not notify their employer of the exemption and the employer continues to take payroll deductions, the employee will not be entitled to any refund of payroll deductions taken before the employer is notified.

If an employer takes payroll deductions after being notified, employers are solely responsible for refunding those amounts to the exempted employee and will not be entitled to a refund from ESD.

Employers should ensure payroll systems are updated to track exemptions, opt-in elections, and reporting obligations.

#### What happens if an employer is found to be non-compliant?

If ESD finds that an employer is non-compliant with collecting premiums from an employee:

- Past due taxes may be deducted from the employee’s paycheck (alternatively, employers may pay the past due premiums); and
- The employer must file an amended report and pay the past due premiums.
- Interest and penalties may apply, and unresolved delinquencies may trigger enforcement actions.

#### Is the Program valid under federal law?

A question still remains whether the Program is preempted by The Employee Retirement Income Security Act (ERISA), a federal law that sets rules and standards for plans established or maintained by employers for the purpose of providing medical, surgical, or hospital benefits in the event of sickness, accident, disability, death, or unemployment. Under the doctrine of preemption, when a state law interferes or conflicts with a federal law, the federal law displaces the state law.

Some have argued that the Program conflicts with ERISA because it applies to the same type of plans that the ERISA governs (e.g., employer-maintained long-term care insurance that provides reimbursements for medical benefits in the event of sickness or disability). The Program is “employer-maintained” because employers are required to take payroll deductions and track exemptions. Further, the Program does not fall under an ERISA-exempted voluntary “payroll practice” because it requires participation by most employees.

Litigation may arise challenging its validity, and employers should monitor legal developments that could impact compliance or program implementation.

## Employer Action

1. Identify employees subject to WA Cares payroll deductions based on Washington work location criteria.
2. Update payroll systems to apply the 0.58% deduction and track exemptions, opt-ins, and out-of-state coverage elections.
3. Retain exemption records for six years and ensure timely removal of deductions for exempt employees.
4. Remit premiums quarterly to the Employment Security Department and monitor compliance deadlines.

## Additional Resources

- [Official Program Website](http://www.wacaresfund.wa.gov/employers/)
- [Employer Toolkit](http://www.wacaresfund.wa.gov/employer-toolkit/)
- Employers can sign up for email updates [here](https://public.govdelivery.com/accounts/WAESD/subscriber/new?topic_id=WAESD_10)
- [Washington Long-Term Services and Supports Trust Program Statute](https://app.leg.wa.gov/RCW/default.aspx?cite=50B.04)
- [Senate Bill 5291: Amendments to the Program](https://lawfilesext.leg.wa.gov/biennium/2025-26/Pdf/Bills/Session%20Laws/Senate/5291-S.SL.pdf?q=20250807162644)
- [HB 1323: Amendments to the Program](http://lawfilesext.leg.wa.gov/biennium/2021-22/Pdf/Bills/House%20Passed%20Legislature/1323-S.PL.pdf#page=1)
- Sequoia Foreword: [Get Ready for Washington State’s New Long-Term Care Program](/content/2022/01/get-ready-for-washington-states-new-long-term-care-program/index.html)

\]\]>Managing Compounded GLP-1 Medications: A Pharmacist’s Guide for Employershttps://www.sequoia.com/2025/08/managing-compounded-glp-1-medications-a-pharmacists-guide-for-employers/

Fri, 15 Aug 2025 14:04:34 +0000https://www.sequoia.com/?p=57213GLP-1 medications such as Ozempic, Wegovy, Mounjaro, and Zepbound have rapidly transformed the management of diabetes and obesity, becoming some of the most requested treatments within employer-sponsored health plans.

However, the high cost and frequent shortages of these FDA-approved drugs have led employers and patients to explore compounded GLP-1 medications as an alternative. As a pharmacist, I aim to provide clarity on the safety, efficacy, and innovative strategies employers can use when considering compounded GLP-1 therapies.

The post [Managing Compounded GLP-1 Medications: A Pharmacist’s Guide for Employers](/content/2025/08/managing-compounded-glp-1-medications-a-pharmacists-guide-for-employers/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

GLP-1 medications such as Ozempic, Wegovy, Mounjaro, and Zepbound have rapidly transformed the management of [diabetes](https://www.cdc.gov/diabetes/data-research/research/new-diabetes-medicines.html) and [obesity](https://www.cdc.gov/obesity/adult-obesity-facts/?CDC_AAref_Val=https://www.cdc.gov/obesity/data/adult.html), becoming some of the most requested treatments within employer-sponsored health plans.

However, the high cost and frequent shortages of these FDA-approved drugs have led employers and patients to explore compounded GLP-1 medications as an [alternative](https://www.fda.gov/drugs/human-drug-compounding/compounding-when-drugs-are-fdas-drug-shortages-list). As a pharmacist, I aim to provide clarity on the safety, efficacy, and innovative strategies employers can use when considering compounded GLP-1 therapies.

## GLP-1 Medications: Why All the Buzz?

GLP-1 receptor agonists have gained widespread acclaim due to their demonstrated clinical efficacy in managing [Type 2 diabetes](https://diabetes.org/newsroom/press-releases/american-diabetes-association-announces-statement-compounded-incretin) and supporting significant weight loss, while reducing cardiovascular risk factors.

The FDA continues to approve these medications for more uses, making these treatments even more attractive to patients and employers. Additionally, exciting [pipeline](https://www.psgconsults.com/blog/exploring-the-2025-obesity-drug-pipeline/) developments such as oral semaglutide and dual and triple agonists like retatrutide suggest continued growth in this therapeutic area.

Given the pace of GLP-1 innovation, employer policies should remain adaptable to emerging clinical evidence and regulatory developments, such as label expansions, updated prescribing guidelines, new safety alerts, or FDA decisions regarding compounded and novel therapies.

**Related article:** [How Employers Can Contain GLP-1 Costs in Their Health Plans](/content/2025/04/glp1-costs-strategies/index.html)

## Understanding Compounded GLP-1 Medications

Compounded GLP-1 medications are prepared by compounding pharmacies, usually at a lower cost than branded alternatives. Unlike FDA-approved medications, [compounded versions](https://www.fda.gov/drugs/human-drug-compounding/compounding-and-fda-questions-and-answers) bypass the rigorous clinical trials and strict oversight typically required.

Employers and patients might consider compounded versions during severe shortages or for significant cost savings, but these medications call for careful consideration. Employers should seek compounding pharmacies accredited by reputable bodies such as [PCAB](https://achc.org/pcab-compounding-pharmacy/) (Pharmacy Compounding Accreditation Board).

## Pharmacist Concerns About Compounded GLP-1s

From a pharmacist’s perspective, compounded GLP-1 medications present several risks:

- [**Safety risks**](https://www.fda.gov/drugs/postmarket-drug-safety-information-patients-and-providers/fdas-concerns-unapproved-glp-1-drugs-used-weight-loss): Potency can vary significantly between batches, increasing the risk of suboptimal dosing or overdose. Past documented issues have included contamination and improper storage, leading to serious adverse reactions.
- **Efficacy risks**: Lack of formal clinical testing means effectiveness can vary. Degradation due to improper storage, lack of bioequivalence studies, and absence of structured safety monitoring programs such as REMS or post-market surveillance may result in unpredictable clinical outcomes. Degradation due to improper storage and absence of bioequivalence studies may result in unpredictable clinical outcomes.
- **[Regulatory and legal risks](https://www.skadden.com/insights/publications/2024/12/compounding-and-glp1s-what-to-expect)**: Compounded medications do not have FDA approval, potentially exposing employers to liability under ERISA and pharmacy benefit management contracts.
- **Reputational risks**: Adverse outcomes from compounded medications could lead to negative media coverage, damaging the employer’s reputation.
- **Dosing variability alert**: Compounded GLP-1s may differ in concentration or formulation compared to branded products, creating potential for confusion or error in administration.

## FDA Shortage Update: Why This Still Matters

Although the [FDA has removed](https://www.fiercehealthcare.com/health-tech/fda-declares-semaglutide-shortage-over-spelling-end-compounded-glp-1-market) certain GLP-1 medications like Ozempic or Wegovy from its official drug shortage list as of 2024, access challenges and demand surges persist in many real-world settings. Pharmacies may still experience delays or limited inventory depending on region, patient volume, or dosage strength. More importantly, employers continue to face financial pressure and member demand for alternatives. This makes it critical for plan sponsors to clearly define when compounded GLP-1s are clinically appropriate and legally supportable, even in a post-shortage environment.

## A Pharmacist-Recommended “Place in Therapy” Framework

To responsibly manage compounded GLP-1s, employers should adopt clear guidelines.

**Appropriate use:**

- During significant shortages or when branded medications are unattainable
- When a patient has a documented allergy or intolerance to an inactive ingredient in the FDA-approved product
- When a clinically justified dose or formulation is not commercially available — for example, micro-dosing or alternative administration
- When a patient faces financial barriers and no affordable FDA-approved options are available, with documented clinical oversight and informed consent

**Inappropriate use:**

- Simply for convenience or general cost-cutting without exploring other available, safer options
- For widespread, elective use without individualized clinical justification
- When used as a first-line alternative in place of available FDA-approved medications

**Decision-making checklist for employers:**

- Confirm PCAB or equivalent pharmacy accreditation
- Require third-party testing for purity, potency, and sterility
- Clarify 503A vs. 503B status and associated legal protections
- Review batch documentation and recall history
- Obtain signed employee consent outlining known risks

## Innovative Employer Strategies for GLP-1 Management

Here are some innovative, practical strategies for GLP-1 management that are grounded in pharmacy best practices.

#### Digital health integration

Digital health platforms can enhance weight loss and chronic condition management through virtual clinical oversight, behavioral coaching, and data-driven interventions. When evaluating these programs, assess not only user experience, but also licensed provider oversight, patient safety protocols, regulatory alignment, and the level of effort required for integration with existing benefit ecosystems.

Examples:

**[Virta Health](https://www.virtahealth.com/press/virta-health-cuts-glp-1-use-for-weight-loss-over-50)** delivers a nutrition-first, medically supervised weight loss and diabetes reversal program with integrated GLP-1 deprescribing protocols. Across its client base, Virta has:

- Discontinued GLP-1 use in over 50% of active users
- Kept GLP-1 utilization under 25% across all weight loss members
- Achieved about 5% average weight loss in 90 days, with durable outcomes post-medication
- Optional [outcomes-based contracts](https://www.virtahealth.com/press/virta-health-launches-industry-first-cost-guarantees) available for employers seeking risk alignment

**[Omada Health](https://resourcecenter.omadahealth.com/glp-1-medications-and-how-omada-can-help/omada-health-s-enhanced-glp-1-care-track-demonstrates-increased-medication-persistence-and-weight-loss-outcomes-at-12-and-24-weeks)** supports chronic disease and weight management through connected devices, digital coaching, and virtual care teams. In a 2025 analysis of 1,124 GLP-1 users without diabetes:

- 94% persisted at 12 weeks, and 84% at 24 weeks compared to typical rates as low as 33%
- Users who remained on GLP-1s through 24 weeks achieved 12.1% weight loss, while early discontinuers lost 7.4% resulting in a 64% relative improvement
- Omada’s companion support model helped members reach clinical trial-level outcomes in real-world settings

#### Outcomes-based contracting

This model shifts financial risk from the employer to the vendor by tying payment to the achievement of predefined clinical outcomes. It’s best suited for pilot programs or GLP-1-specific carve-outs, where employers want cost containment without compromising access.

Request contract samples with clear definitions of success, such as weight loss thresholds, A1C reductions, and deprescription rates, as well as transparent claims-based performance validation.

Example:

**[Twin Health](https://www.nature.com/articles/s41598-024-76584-7.pdf)** delivers personalized, data-driven care through its “digital twin” platform, aiming to reverse chronic metabolic disease without relying on GLP-1 medications. The program operates under a 100% outcomes-based contract with no per member, per month (PMPM) fees.

- Employers only pay when predefined outcomes are achieved
- Guaranteed improvements in A1C, weight loss, and deprescription of GLP-1s and other medications
- ROI is validated using pharmacy and medical claims data
- Reported outcomes include a 2.2-point average A1C reduction for members with starting A1C greater than8.0 and a 14-pound average weight loss for members with a BMI greater than 30, based on [internal data](https://usa.twinhealth.com/) from Twin Health’s commercial populations as of September 2024
- Demonstrated reductions in diabetes-related pharmacy spend while maintaining clinical appropriateness

#### Precision medication management

Employers can start by using claims and clinical data to identify risk levels and guide GLP-1 eligibility. This includes applying evidence-based criteria such as BMI thresholds, diagnosis history, and documentation of prior lifestyle interventions. Emerging tools like pharmacogenomics may offer future potential for personalization but should be adopted cautiously until validated for clinical use at scale.

Examples:

- A [Truveris](https://truveris.com/managing-glp-1-coverage/) analysis of over 1.1 million GLP-1 claims from early 2023 to early 2025 found that GLP-1 spend increased fivefold, with a 16% average cost increase per claim, highlighting the need for utilization strategies such as step therapy, targeted prior authorization, and indication-based coverage.
- Pharmacogenomic research suggests that genetic differences may affect GLP-1 treatment response. In a [genome-wide study](https://www.sciencedirect.com/science/article/pii/S2213858722003400) of over 4,500 adults with type 2 diabetes, 4% of patients with favorable variants in the GLP1R and ARRB1 genes saw a 30% greater reduction in HbA1c after six months of therapy.

#### GLP-1 budget modeling

Work collaboratively with actuaries, pharmacy consultants, and PBMs to forecast utilization, model benefit tiering scenarios, and project the impact of step therapy or lifestyle-first pathways on total cost of care.

Example:

- [WTW](https://www.wtwco.com/en-us/insights/2025/04/glp-1-drugs-in-2025-cost-access-and-the-future-of-obesity-treatment) reported that GLP-1 medications now represent 16% of pharmacy spend, up from 1% in 2020, highlighting the importance of modeling three- to five- year budget exposure and management levers.

## Practical Tools and Employer Resources

Employers seeking further insights or personalized guidance should consult with pharmacists and benefits experts. When exploring digital health programs or vendor partnerships, it is essential to critically evaluate clinical oversight, regulatory compliance, and outcomes reporting to ensure alignment with your organization’s standards and member safety.

Equip your HR and benefits team with actionable resources, such as these:

- [Employee Education Article](https://www.eatingwell.com/what-are-glp-1-compounding-formulas-and-are-they-safe-11744746?utm_source=chatgpt.com): Clearly communicate risks, benefits, and appropriate use of compounded GLP-1 medications
- [Employer Pharmacy Checklist](https://nabp.pharmacy/programs/accreditations/compounding-pharmacy/): Criteria for selecting reputable compounding pharmacies, ensuring rigorous quality control and safety measures

## Key Takeaways

- Compounded GLP-1 medications pose clinical, legal, and reputational risks if not properly managed.
- Their place in therapy extends beyond shortages to include documented ingredient intolerances, non-standard dosing needs, and financial hardship with appropriate safeguards.
- Employers must vet compounding pharmacies thoroughly and require third-party testing and documented employee consent.
- Innovative strategies like digital health integration, outcomes-based contracting, and predictive analytics can optimize safe access while managing cost and utilization.

## Balancing Innovation, Safety, and Affordability

Navigating compounded GLP-1 medications demands a careful, pharmacist-informed strategy. By clearly understanding the safety, efficacy, and regulatory landscape, employers can adopt innovative approaches that protect employee health, minimize risks, and manage costs effectively.

## Have Questions about Your Pharmacy Benefits Strategy?

To support companies and their employees, Sequoia’s pharmacy advisory team implements a comprehensive pharmacy benefit management strategy. To learn more, [connect with a Sequoia advisor](/content/form/consultation/index.html).

\]\]>Colorado Court Finds Life Insurance Oversight Results in Fiduciary Breachhttps://www.sequoia.com/2025/08/colorado-court-finds-life-insurance-oversight-results-in-fiduciary-breach/

Thu, 14 Aug 2025 18:36:53 +0000https://www.sequoia.com/?p=57216On May 7, 2025, the U.S. District Court for the District of Colorado ruled in favor of the plaintiff in Watson v. EMC Corp., awarding equitable relief in the form of a $633,000 surcharge. The court found that EMC Corp., acting as an ERISA fiduciary, failed to meet its duty of care by not adequately informing a former employee about the need to convert their group life insurance coverage after employment ended. The Court found that although EMC Corp. had provided standard plan documents to the former employee, its response to the employee’s direct inquiry lacked the clarity and completeness required under ERISA, ultimately leading to a loss of coverage and benefits.

The post [Colorado Court Finds Life Insurance Oversight Results in Fiduciary Breach](/content/2025/08/colorado-court-finds-life-insurance-oversight-results-in-fiduciary-breach/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

On May 7, 2025, the U.S. District Court for the District of Colorado ruled in favor of the plaintiff in _[Watson v. EMC Corp.](https://cases.justia.com/federal/district-courts/colorado/codce/1:2019cv02667/191926/143/0.pdf?ts=1746698018)_, awarding equitable relief in the form of a $633,000 surcharge. The court found that EMC Corp., acting as an ERISA fiduciary, failed to meet its duty of care by not adequately informing a former employee about the need to convert their group life insurance coverage after employment ended. The Court found that although EMC Corp. had provided standard plan documents to the former employee, its response to the employee’s direct inquiry lacked the clarity and completeness required under ERISA, ultimately leading to a loss of coverage and benefits.

## Case Background

Prior to separation from employment, the former employee emailed EMC Corp. asking how to continue “benefits at the employee rate” after leaving the company. EMC Corp. responded with information about continuing coverage for the health benefits but failed to mention that the group life insurance plan benefits would end and that they would need to be converted to an individual policy to remain in effect. The company stated that benefits would continue during the transition, if premiums were paid, but did not clarify that this did not apply to the life insurance benefit. At the time of the inquiry, the life insurance policy was still within the conversion window. As such, had the employee received clear and complete instructions, they could have taken action to convert the policy.

Following the death of the former employee, the surviving spouse submitted a claim under the life insurance policy, which was denied due to the lapse in coverage. The surviving spouse subsequently filed suit under ERISA, alleging that EMC Corp. breached its fiduciary duty by failing to inform the employee about the need to convert the life insurance policy after employment ended.

EMC Corp. argued that it had satisfied its obligations by previously distributing standard documents, including a separation agreement, certificate of coverage, and a Notice of Group Life Conversion Privilege. It also contended that the former employee’s email inquiry did not specifically reference life insurance and therefore did not trigger a duty to clarify or provide additional information.

## Court Findings

The court rejected EMC Corp.’s argument that it had no duty to provide individualized guidance under the circumstances, finding that the employee’s general inquiry about continuing benefits should have triggered a comprehensive response addressing **_all_ applicable coverage**, including life insurance. It reaffirmed that ERISA fiduciaries are obligated to respond accurately and timely to participant inquiries, especially when the participant is relying on their expertise and guidance. This underscores the fundamental duties of fiduciaries under ERISA, which require employers as plan administrators to act with a high standard of care, loyalty, and diligence. Fiduciaries must possess and apply the necessary expertise to guide participants effectively, ensuring that communications are not only accurate but also complete and responsive to the participant’s needs.

The Court concluded that EMC Corp. breached its fiduciary duty under ERISA by failing to inform the employee about the need to convert their life insurance coverage. It found EMC Corp.’s response misleading by omission and emphasized that fiduciaries must go beyond simply distributing plan documents and should ensure participants understand their rights and options.

The Court found that the plaintiff in the case established that the loss of life insurance benefits was directly attributable to EMC’s fiduciary breach. As a remedy, the Court awarded a surcharge equal to the value of the life insurance policy, $633,000, minus any premiums that would have been required to maintain coverage.

This decision aligns with a growing body of case law across multiple jurisdictions reinforcing that ERISA fiduciaries have a duty to provide complete and accurate information in response to participant inquiries, even when the participant does not explicitly ask about a specific benefit. Courts have emphasized that fiduciaries must proactively disclose material information relevant to a participant’s circumstances. This includes situations where the participant may not fully understand what to ask but is clearly seeking guidance.

## Employer Implications

This case highlights the importance of clear, complete, and proactive communication with employees regarding all benefit options, **particularly during employment transitions**. Life insurance, often bundled with other ancillary benefits and treated as a secondary offering, is frequently overlooked in employee offboarding discussions. As this case demonstrates, failing to inform employees about conversion rights or coverage termination can have significant consequences.

The Court made clear that fiduciary duties under ERISA extend beyond simply distributing plan documents. Employers must ensure that employees not only receive required notices but also understand their rights and options, especially when they make direct inquiries.

This ruling also reinforces that courts are willing to impose equitable remedies, such as surcharges, when fiduciary breaches cause actual harm. Employers should view this as a cautionary example of how gaps in benefit communication, particularly around life insurance, can expose the organization to liability, even when procedural requirements appear to have been met.

## Recommended Employer Actions

To reduce the risk of fiduciary breaches and ensure compliance with ERISA, employers should consider the following steps:

- **Respond Thoroughly to Benefit Inquiries**. When employees ask about continuing benefits, especially during transitions such as offboarding, provide clear and complete information covering all applicable benefits.
- **Go Beyond Standard Notices**. Distributing plan documents alone is not enough. Employers should provide actionable, personalized guidance to help employees understand their rights and options.
- **Prioritize Life Insurance at Offboarding**. Life insurance is often treated as a secondary benefit but carries significant financial implications. Employers will want to make life insurance a standard part of all exit communications and benefit continuation discussions.
- **Review and Strengthen Internal Processes**. Regularly audit and update offboarding procedures, employee communications, and HR training materials to ensure alignment with ERISA fiduciary obligations and to reflect best practices.

\]\]>2026 San Francisco Health Care Security Ordinance Rates Releasedhttps://www.sequoia.com/2025/08/2026-san-francisco-health-care-security-ordinance-rates-released/

Tue, 12 Aug 2025 16:25:36 +0000https://www.sequoia.com/?p=57202Recently, the 2026 San Francisco Health Care Security Ordinance (SF HCSO) expenditure rates were released, which are increased annually and vary based on employer size.

The post [2026 San Francisco Health Care Security Ordinance Rates Released](/content/2025/08/2026-san-francisco-health-care-security-ordinance-rates-released/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Recently, the 2026 San Francisco Health Care Security Ordinance (SF HCSO) expenditure rates were released, which are increased annually and vary based on employer size.

For 2026, medium-sized [covered employers](https://www.sf.gov/information/section-b-covered-employers-hcso-administrative-guidance) must spend $2.74 per hour payable (up to a maximum of $471.28 per month, based on a maximum of 172 hours payable) and large covered employers must spend $4.11 per hour payable (up to a maximum of $706.92 per month, based on a maximum of 172 hours payable) on their [covered employees’](https://sf.gov/information/section-c-covered-employees-hcso-administrative-guidance) health care.

The new 2026 rates, as compared to the 2025 rates, are outlined below:

|     |     |     |
| --- | --- | --- |
|  | **2026 Rates** | **2025 Rates** |
| **Small Employers**<br>**(0-19 employees)** | Exempt | Exempt |
| **Medium Employer**<br>**(20-99 employees)** | $2.74/hour<br>(max $471.28/month) | $2.56/hour<br>(max $440.32/month) |
| **Large Employer**<br>**(100+ employees)** | $4.11/hour<br>(max $706.92/month) | $3.85/hour<br>(max $662.20/month) |

As a reminder, SF HCSO requires [covered employers](https://www.sf.gov/information/section-b-covered-employers-hcso-administrative-guidance) to spend a [minimum amount](https://www.sf.gov/information/section-d-calculating-health-care-expenditures-hcso-administrative-guidance) on [covered employees’](https://sf.gov/information/section-c-covered-employees-hcso-administrative-guidance) healthcare. For more information on who qualifies as a covered employer, which employees are covered by the ordinance, and other employer obligations under the SF HCSO regulations, we recommend employers review the [SF HCSO website](https://sf.gov/information/understanding-health-care-security-ordinance), [SF HCSO administrative guidance](https://www.sf.gov/information/hcso-administrative-guidance), and [accompanying regulations](https://www.sf.gov/sites/default/files/2024-09/HCSO_Administrative_Guidance_Sept_2024.pdf). _Please note that Sequoia clients have access to additional guidance and resources on this topic through the Sequoia Platform._

## Employer Takeaways

- Determine if your organization qualifies as a [covered employer](https://www.sf.gov/information/section-b-covered-employers-hcso-administrative-guidance) under SF HCSO.
- Review which [employees](https://sf.gov/information/section-c-covered-employees-hcso-administrative-guidance) are subject to the ordinance for the upcoming plan year.
- Develop a strategy to meet the 2026 health care expenditure requirements.

## Additional Resources

- [SF HCSO Website](https://www.sf.gov/information--health-care-security-ordinance)
- [San Francisco City Option](https://sfcityoption.org/employers/)

\]\]>Mental Health Parity Compliance Concerns Persist: 2024 Key Findings Report to Congresshttps://www.sequoia.com/2025/08/mental-health-parity-compliance-concerns-persist-2024-key-findings-report-to-congress/

Thu, 07 Aug 2025 19:57:37 +0000https://www.sequoia.com/?p=57182In early 2025, the Departments of Labor, Health and Human Services, and the Treasury (collectively the “Departments”) released their third annual MHPAEA Report to Congress, fulfilling the disclosure mandate under the Consolidated Appropriations Act, 2021 (CAA). The report highlights ongoing enforcement efforts and persistent compliance concerns, particularly around plan design and the application of non-quantitative treatment limitations (NQTLs). These issues mirror those raised in prior reports (see: Ongoing Mental Health Parity Compliance Concerns Identified in the 2023 Report to Congress) and are explained further below.

The post [Mental Health Parity Compliance Concerns Persist: 2024 Key Findings Report to Congress](/content/2025/08/mental-health-parity-compliance-concerns-persist-2024-key-findings-report-to-congress/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

In early 2025, the Departments of Labor, Health and Human Services, and the Treasury (collectively the “Departments”) released their third annual MHPAEA [Report to Congress](https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/mental-health-parity/report-to-congress-2024.pdf), fulfilling the disclosure mandate under the Consolidated Appropriations Act, 2021 (CAA). The report highlights ongoing enforcement efforts and persistent compliance concerns, particularly around plan design and the application of non-quantitative treatment limitations (NQTLs). These issues mirror those raised in prior reports (see: [Ongoing Mental Health Parity Compliance Concerns Identified in the 2023 Report to Congress](/content/2023/09/ongoing-mental-health-parity-compliance-concerns-identified-in-the-2023-report-to-congress/index.html)) and are explained further below.

## Compliance Snapshot

- **Widespread Noncompliance Persists**. The Departments continue to identify systemic issues with how plans apply NQTLs, including inadequate comparative analyses and impermissible exclusions of key mental health and substance use disorder (MH/SUD) treatments.
- **Enforcement Activity Intensifies**. The Employee Benefit Security Administration (EBSA) and Centers for Medicare and Medicaid Services (CMS) issued over 120 enforcement letters during the reporting period, including 32 initial determinations and 3 final noncompliance findings—primarily targeting network adequacy and prior authorization practices.
- **Comparative Analyses Common Deficiencies**. Plans frequently failed to prepare analyses, omitted benefit classifications, and relied on vague or unsupported assertions, ultimately hindering their ability to demonstrate MHPAEA compliance.

## Background

MHPAEA requires group health plans and insurers that offer mental health or substance use disorder (MH/SUD) benefits to do so no less favorably than medical/surgical (M/S) benefits. This includes financial requirements (e.g., copays), treatment limitations (e.g., frequency of treatment, number of visits, days of coverage), and NQTLs such as prior authorization requirements, step therapy/fail-first policies, and limitations based on medical necessity (note this is not an exhaustive list).

Since February 2021, the CAA has required plans that impose NQTLs on MH/SUD benefits to conduct and document a comparative analysis showing compliance with MHPAEA. The Department of Labor (DOL) must report annually to Congress on these analyses and overall MHPAEA enforcement. Per the [report](https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/mental-health-parity/report-to-congress-2024.pdf), EBSA’s efforts under the CAA have cumulatively resulted in corrections that have benefited directly more than 7.6 million participants in more than 72,000 plans.

For more information on the comparative analysis requirement, see our article _[Guidance Released on the New Mental Health Parity Comparative Analysis Requirements](/content/2021/04/guidance-released-on-the-new-mental-health-parity-comparative-analysis-requirements/index.html)_.

## 2024 Report to Congress: Highlights

The [report](https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/mental-health-parity/report-to-congress-2024.pdf) summarizes recent MHPAEA enforcement efforts and in doing so, provides awareness of overall MHPAEA ongoing compliance issues. The 2024 [report](https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/mental-health-parity/report-to-congress-2024.pdf) looks at the reporting period ending July 31, 2023, wherein the EBSA and Centers for Medicare and Medicaid Services (CMS) issued:

- 39 initial letters requesting comparative analyses;
- 55 insufficiency letters covering over 40 NQTLs; and
- 32 initial determination letters finding that plans and issuers had violated MHPAEA’s requirements; and
- 3 final determinations of noncompliance finding an issuer violated MHPAEA’s requirements for 3 NQTLs, including network participation and prior authorization (all final determinations issued by CMS to only health insurance issuer).

The [report](https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/mental-health-parity/report-to-congress-2024.pdf) discusses common NQTL deficiencies (similar to those identified in the [2022](https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/mental-health-parity/report-to-congress-2022) and [2023](https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/mental-health-parity/report-to-congress-2023.pdf) reports) and their related enforcement action. Highlights from the report include:

- **Enforcement Priorities**. The report reiterates enforcement priorities mentioned in the [2023 report](https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/mental-health-parity/report-to-congress-2023.pdf):

- Prior authorization requirements for in- and out-of-network inpatient services;
  - Concurrent care review for in- and out-of-network inpatient and outpatient services;
  - Out-of-network reimbursement rates (methods for determining usual, customary, and reasonable charges);
  - Standards for provider admission to participate in a network, including reimbursement rates;
  - Impermissible exclusions of key treatments for MH/SUD; and
  - Adequacy standards for MH/SUD provider networks (e.g., time/distance standards, provider-to-member ratios).

Network adequacy and composition continues to be a prominent focus for the Departments, especially given that such NQTL can significantly impact access to MH/SUD benefits. EBSA anticipates continuing to investigate network adequacy and composition in future reporting periods.

Of interest, when targeting impermissible exclusions of key treatments for MH/SUD benefits, EBSA engages directly with third-party administrators (TPAs) and carriers before reaching out to the plans they serve. Once a potentially noncompliant exclusion is identified, the service provider is required to flag all affected plan clients. EBSA then reviews the relevant comparative analyses and works collaboratively with both the provider and the plans to remove or correct the exclusion.

- **Comparative Analyses**. Common deficiencies continued to be observed include:

- **No Comparative Analysis Prepared**. Plans fail to meet the basic requirement of conducting and documenting an NQTL analysis.
  - **Superficial or Vague Comparisons**. Submissions often lack meaningful evaluation of how MH/SUD and M/S benefits are treated.
  - **Unexplained Documentation**. Supporting materials are submitted without context, rationale, or clear linkage to compliance.
  - **Missing Benefit Classifications**. Analyses omit which specific MH/SUD and M/S benefits or classifications are affected by the NQTL.
  - **Overemphasis on Similarities**. Plans highlight where MH/SUD and M/S benefits align, but ignore or gloss over critical differences.
  - **Unsupported Conclusions**. Statements of compliance are made without data, evidence, or a clear analytical framework.

As explained further in the [report](https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/mental-health-parity/report-to-congress-2024.pdf) (with examples of NQTL deficiencies and corrections), most initial submissions lacked sufficient detail, data, or documentation and plans often applied more lenient access standards to M/S providers than to MH/SUD providers. Commonly excluded MH/SUD treatments included applied behavior analysis (ABA) therapy for autism, medication-assisted treatment (MAT) for opioid use disorder, and nutritional counseling for eating disorders. In addition, MH/SUD providers were often reimbursed at lower rates than M/S providers without adequate explanation.

With the above in mind, employers should ensure that their comparative analyses are thorough, data-driven, and include defined factors and evidentiary standards, demonstration of comparability and stringency (both written and in operation), and relevant outcomes data (e.g., out-of-network utilization, wait times). Importantly, the [report](https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/mental-health-parity/report-to-congress-2024.pdf) confirms that the Departments are developing a model comparative analysis designed to offer practical, detailed guidance to help plans and insurers meet MHPAEA’s documentation and compliance standards more effectively.

## Employer Takeaways

The 2024 MHPAEA Report to Congress makes clear that the Departments continue to identify widespread noncompliance with the design and application of nonquantitative treatment limitations (NQTLs). While the report does not introduce new employer obligations, it does offer critical insights for maintaining compliance:

- Employers should work in conjunction with their carriers and TPAs when implementing plan designs that impose NQTLs. For example, employers should review their plan’s network adequacy, evaluating access standards, reimbursement rates, and provider availability for MH/SUD as compared to M/S benefits; and remove any categorical exclusions that apply only to MH/SUD benefits.
- Employers should work with their carrier (if fully insured) or TPA (if self-insured or level funded) to perform and provide the comparative analysis and provide it upon request to plan participants, the DOL, or state agencies. See our article for the most recent guidance impacting the comparative analysis requirement, [Mental Health Parity Final Rules: Enforcement Paused](/content/2025/05/mental-health-parity-final-rules-enforcement-paused/index.html).

## Additional Resources

- [2024 MHPAEA Report to Congress](https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/mental-health-parity/report-to-congress-2024.pdf)
- [The Department of Labor MHPAEA Self-Compliance Tool](https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/laws/mental-health-parity/self-compliance-tool.pdf)
- Sequoia Forewords:
  - [Mental Health Parity Final Rules: Enforcement Paused](/content/2025/05/mental-health-parity-final-rules-enforcement-paused/index.html)
  - [Ongoing Mental Health Parity Compliance Concerns Identified in the 2023 Report to Congress](/content/2023/09/ongoing-mental-health-parity-compliance-concerns-identified-in-the-2023-report-to-congress/index.html)

\]\]>Risk Management Is a Story Worth Tellinghttps://www.sequoia.com/2025/08/risk-management-is-a-story-worth-telling/

Tue, 05 Aug 2025 16:14:37 +0000https://www.sequoia.com/?p=57159Why risk leaders need to think like storytellers—and how the right narrative can drive smarter, safer business decisions.

The post [Risk Management Is a Story Worth Telling](/content/2025/08/risk-management-is-a-story-worth-telling/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

My first job was at a pool club in Raleigh, North Carolina. I was 14, sweeping the pool deck and keeping things tidy while the older kids got to be lifeguards. The next summer, I finally earned the whistle and got to sit in the high chair. That early job taught me what it felt like to be responsible for keeping people safe. I didn’t know it then, but that was the start of a career in risk.

For more than two decades, I’ve learned that risk isn’t something you manage from the sidelines. It’s woven into every decision a business makes — how you grow, how you protect what you’ve built, and how you prepare for what’s next. Today, as chief risk officer at Sequoia and [president of the Risk Management Insurance Society](https://www.rims.org/about-us/leadership-corner/article/kristen-peed-named-2025-president-of-rims) (RIMS), I spend a lot of time thinking about how we help companies connect those dots. Because when you understand risk, you can tell the stories behind it. And that’s when the real value shows up.

That’s what this column is about.

Each month, I’ll be writing about what’s changing in the risk and insurance world, how to think more holistically about the total cost of risk, and how legal and risk leaders can better align to make smarter, faster decisions. I’ll also dig into what’s behind the headlines —from extreme weather to cyber security — and what it all means for companies trying to protect their people, data, and bottom line.

Risk is full of unknowns. That’s why storytelling is so important. As a risk professional, CFO, or in-house counsel, navigating these decisions — you need to understand how to craft the right story. That means understanding your risk appetite, asking leadership uncomfortable questions, and creating a clear narrative for underwriters, boards, and internal partners. What makes a risk a good bet? What’s missing? And how do you show that you’ve thought three steps ahead?

At Sequoia, we ask these questions every day. We place corporate insurance programs, we underwrite coverage for startups, and we advise our clients as if we were in their shoes —because many of us were. I started my career on the corporate risk side. That experience helps me think through problems from the inside out, and it’s why I believe so strongly in where Sequoia shines: exceptional client service. We’re not just selling coverage — we’re building partnerships that help our clients grow smarter and safer.

The truth is, not every company has a risk manager. But every company has an insurance broker. That broker needs to be more than a middleman. They need to be a translator, a strategist, and a storyteller. And that’s exactly what we aim to be at Sequoia.

So, whether you’re a legal leader trying to understand your organization’s exposure, or a startup wondering if your [cyber coverage](/content/2025/09/cyber-liability-risk/index.html) actually covers what you think it does, this column is for you. Let’s talk about what’s ahead, what’s changing, and how to navigate it together.

Because if nothing bad happens, we’ve done our job. But if something does? We’ll be ready.

**Related:**

- [Cyber Liability Risk in the Age of AI: Smarter Tools, Higher Stakes](/content/2025/09/cyber-liability-risk/index.html)
- [Travel Risks: Why Employers’ Duty of Care Doesn’t Take Holidays](/content/2025/11/duty-of-care-risk-strategy/index.html)
- [Are You Really Covered? Why General Liability Isn’t Enough for Third-Party Risk](/content/2025/10/third-party-liability/index.html)

\]\]>Is Computer Science the New Liberal Arts Degree? https://www.sequoia.com/2025/07/ai-and-engineering-jobs/

Thu, 31 Jul 2025 15:26:01 +0000https://www.sequoia.com/?p=57024AI is reshaping the job market, and no one feels it more than software engineers. Explore why traditional tech roles are disappearing, what skills matter now, and how Sequoia helps companies adapt through data-driven people strategy.

The post [Is Computer Science the New Liberal Arts Degree?](/content/2025/07/ai-and-engineering-jobs/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

For decades, a computer science degree was a sure path to a secure, high-paying career with steady demand and plenty of career growth opportunities. In an uncertain economy, it seemed like a smart move for a young professional.

But in 2025, that certainty is slipping fast.

The rise of generative AI has reshaped not only how we work, but who works. Entry-level software engineering roles, once considered a guaranteed foot in the door, are vanishing. And the irony is real: AI is replacing the very jobs that built it.

The numbers are telling. In June, the US [unemployment rate for 20- to 24-year-olds](https://www.bls.gov/news.release/pdf/empsit.pdf) spiked to 8.2%, nearly double the [national average](https://www.bls.gov/news.release/pdf/empsit.pdf). College grads entering the workforce are struggling — especially in tech. While sectors like healthcare and hospitality added jobs, professional and business services, a category that includes many engineering and technical roles, [lost 17,000 jobs in June alone](https://www.bls.gov/news.release/archives/empsit_07052024.pdf).

And this isn’t a case of cyclical layoffs. Companies are [actively cutting white-collar roles](https://www.wsj.com/business/the-biggest-companies-across-america-are-cutting-their-workforces-a0e8739a), including software engineering positions, opting not to retrain but to replace them with AI. Many firms are finding they don’t need large teams of coders when AI can generate usable code in seconds.

At the same time, we’re seeing record investments in AI talent. Meta’s $14 billion acquisition of Scale AI, described by some as [a move to bolster its model training](https://www.forbes.com/sites/janakirammsv/2025/06/23/meta-invests-14-billion-in-scale-ai-to-strengthen-model-training/) capabilities, was less about the tech itself and more about securing elite AI engineers. It may be the largest acquihire in tech history. But even here, the opportunity is reserved for a select few with highly [specialized AI skills](https://www.theguardian.com/us-news/2025/jun/28/mark-zuckerberg-ai-list).

The AI boom isn’t following the patterns of past tech cycles. AI startups don’t look like the SaaS companies of the last decade. They’re scaling lean, sometimes with just dozens of employees, while still commanding multibillion-dollar valuations. The traditional model of high-growth companies expanding headcount, investing in people teams, and broadly distributing equity [isn’t playing out the same way this time](https://www.wsj.com/business/the-biggest-companies-across-america-are-cutting-their-workforces-a0e8739a).

That shift poses hard questions for employers and founders. What skills are worth investing in? What roles are future-proof? And how do you build a career path — or a company — when the old playbook doesn’t apply?

Across industries, America’s largest companies are cutting their workforces. And AI is reshaping white-collar work well beyond tech.

In conversations with leaders, I’ve heard a rough breakdown of the workforce today:

- A third are openly using AI at work.
- A third are using it quietly, but not sharing with managers or peers.
- A third aren’t engaging with AI at all.

It’s that last group that raises the biggest questions. This isn’t a passing trend. The AI shift is structural and it’s moving fast.

We’ve seen hot job markets cool before. The difference now is speed. The AI cycle feels faster. We’ve already watched the rise and fade of hot roles like “prompt engineer,” once hailed as the future of work, now a baseline skill for anyone using generative AI tools.

Looking ahead, the most valuable skill might not be coding, or even knowing how to use AI, but the critical thinking to adapt as the market keeps shifting. The ability to learn, assess, and apply new tools will matter more than memorizing syntax.

We may not have all the answers yet. But one thing is clear: The days of assuming a technical degree guarantees job security are over.

The AI era isn’t just a technological shift, it’s a leadership challenge. For founders and executives, the imperative isn’t to predict every change, but to build organizations resilient enough to adapt to  them. That means investing in adaptable teams, rewarding critical thinking, and staying grounded in what your business — and your people — need to thrive in a shifting market. The companies that get this right won’t just survive the AI transition, they’ll define it.

## Where Do You Go From Here?

At Sequoia, we believe the AI era calls for more than just new tools. It demands new ways of thinking about people and data. Just as AI models rely on well-labeled data to generate insights, organizations need structured, meaningful employee data to make smarter decisions.

That’s where we come in. By integrating our clients’ workforce data into our advisory, we help uncover patterns, surface opportunities, and guide strategic decisions — all with the speed and clarity today’s market demands.

If you’re rethinking how your team is built or where to invest in talent, we’d love to help. [Connect with a Sequoia advisor](/content/form/consultation/index.html) to explore how your people data can become a strategic advantage in the age of AI.

**Related:**

[The Founder Mindset Shift: Why M&A in the new IPO](/content/2025/09/founder-exit-strategy/index.html)

[The Investor-Backed Guide to Executive Compensation](/content/resources/insights-reports/investor-backed-guide-executive-compensation/index.html)

\]\]>2026 ACA Affordability Rate Increases to 9.96%https://www.sequoia.com/2025/07/2026-aca-affordability-rate-increases-to-9-96/

Fri, 25 Jul 2025 16:05:34 +0000https://www.sequoia.com/?p=56992...

The post [2026 ACA Affordability Rate Increases to 9.96%](/content/2025/07/2026-aca-affordability-rate-increases-to-9-96/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

Recently, the Internal Revenue Service (IRS) released [Rev. Proc. 2025-25](https://www.irs.gov/pub/irs-drop/rp-25-25.pdf), which sets the Affordable Care Act (ACA) affordability percentage to **9.96% for plan years beginning in 2026**, up from 9.02% for 2025.

As a reminder, the ACA requires Applicable Large Employers (ALEs) to offer affordable minimum value coverage to their full-time employees and dependents or face a potential penalty. Based on the 2026 affordability rate, ALEs (with plan years beginning January 1, 2026, through June 1, 2026) will automatically meet the affordability requirement if they offer at least one plan that costs employees no more than $129.89 (rounded to the nearest penny) per month for self-only coverage under the federal poverty level (FPL) safe harbor. See below for distinctions for plan years beginning on or after July 1, 2026, as well as a further discussion on alternative ways employers can meet the affordability requirement.

## Compliance Snapshot

- For plan years beginning in 2026, ALEs must offer at least one plan where the cost of self-only coverage does not exceed 9.96% of the employee’s household income.
- ALEs with plan years beginning January through June 2026 that offer at least one plan that costs employees no more than $129.89 per month for self-only coverage will meet 2026 affordability under the FPL safe harbor.\*
- ALEs who use an affordability safe harbor other than the FPL (i.e., the W-2 or Rate of Pay safe harbors) may rely on the 9.96% rate.

_\*Note that employers are permitted to use the federal poverty guidelines in effect six months prior to the beginning of the plan year to calculate affordability under the FPL safe harbor. The 2026 federal poverty amount will be released in early 2026 and employers with plan years beginning after its release may use that number to calculate affordability (noting that plan years beginning July through December 2026 are required to use the 2026 federal poverty amount to calculate affordability), explained further below and in our blog, [2025 Federal Poverty Level Announced: Impact on ACA Affordability](/content/2025/01/2025-federal-poverty-level-announced-impact-on-aca-affordability/index.html)._

## Frequently Asked Questions

**Which employers are considered Applicable Large Employers (ALEs) under the ACA?**

ALEs are employers with 50 or more full-time and full-time equivalent employees, on average, in the prior calendar year. Non-ALEs are not subject to the ACA employer mandate and are not subject to the “affordability” requirement. Companies with a common owner (part of a controlled group) or that are otherwise related under section 414 of the Internal Revenue Code are generally combined and treated as a single employer for determining ALE status. For additional information on how to determine ALE status, see this [IRS webpage](https://www.irs.gov/affordable-care-act/employers/determining-if-an-employer-is-an-applicable-large-employer).

**What type of coverage must an ALE offer under the ACA?**

Under the ACA employer mandate (also known as the “pay or play mandate”), ALEs must offer _affordable_, minimum value coverage to full-time employees and their dependents, or potentially face a penalty.

**What is minimum value coverage?**

A group health plan meets the minimum value coverage requirement if it pays at least 60 percent of the total allowed cost of benefits that are expected to be incurred by the plan and substantially covers in-patient hospitalization or physician services.

**How can employers determine whether their coverage is “affordable” under ACA?**

For plan years starting in 2026, ALEs must offer **at least one plan** that costs employees no more than 9.96% of their household income. ALEs can utilize any one of the three following “safe harbors” to determine whether they meet the 2026 affordability requirement:

- **Federal Poverty Level (FPL)**: Coverage will be affordable if the cost to employees for self-only coverage on the lowest-cost plan offered is no more than 9.96% of the federal poverty level (which is determined annually). For 2026, employers with plan years beginning January through June 2026 will meet the FPL safe harbor if they offer their full-time employees at least one plan that costs no more than $129.89 ($162.26 for Alaska, and $149.31 for Hawaii ) for self-only coverage.
- **Rate of Pay**: This safe harbor will be met if the cost to employees for self-only coverage does not exceed 9.96% of their monthly salary (or hourly rate multiplied by 130).
- **W-2**: This safe harbor will be met if the cost to an employee for self-only coverage does not exceed 9.96% of that employee’s annual wages, as outlined on their W-2 at the end of the year. This approach is generally not recommended, as employers will not know the exact wages reported on employees’ W-2s until the end of 2026. As such, it is a bit less predictable than the other two methods.

**What is the simplest method for employers to meet affordability?**

The easiest method for meeting affordability is the FPL safe harbor because it allows employers to determine a single amount that is considered affordable for all employees. Further, it provides employers with a streamlined approach for completing their ACA reporting.

Under the FPL safe harbor, an employer must offer at least one plan with self-only coverage that costs employees no more than the FPL safe harbor amount. The 2026 FPL safe harbor amount is calculated based on the following formula:

Monthly 2026 Safe Harbor Amount = \[9.96% x Federal Poverty Level (FPL)\] / 12

Although the 2026 FPL is not released until early 2065, ALEs can rely on federal poverty guidelines in effect six months prior to the beginning of the plan year (i.e., the 2025 FPL guidelines) to calculate the safe harbor amounts for 2026, as mentioned above. Based on the 2025 FPL guidelines, **ALEs with plan years beginning January through June 2026 will offer affordable coverage if they offer at least one plan that costs employees no more than $129.89 per month**.

**What about non-calendar year plans?**

Employers with plan years beginning after the 2026 FPL guidelines are released (e.g., February through June 2026) may use the 2026 FPL guidelines to calculate affordability. Importantly, plan years beginning July through December 2026 are required to use the 2026 FPL guidelines to calculate affordability.

**How can employers meet affordability?**

If an ALE determines that they are not meeting affordability under one of the three safe harbors outlined above, they must increase the employer contribution toward self-only medical coverage (to lower the employee share of the premiums) so that the employee share of at least one medical plan offered to full-time employees is deemed affordable.

It is important for ALEs to be aware that the “affordable” plan must be offered to all of their full-time employees (those working an average of at least 30 or more hours per week). ALEs that offer different medical plans to different groups of full-time employees should be especially vigilant to ensure an affordable plan is offered to each group of full-time employees.

**What are the penalties if ALEs do not offer affordable coverage?**

An ALE who does not comply with the employer mandate and has at least one full-time employee that receives a premium subsidy for enrolling in coverage through the Marketplace Exchange may receive one of two potential penalties, as outlined below:

1. **Penalty A**: If an ALE fails to offer minimum essential coverage to at least 95% of their full-time employees in any calendar month, they may be subject to an “A” penalty. The A penalty is triggered if at least one full-time employee enrolls in coverage through the Exchange and receives a premium subsidy for coverage. The A penalty is determined by multiplying the penalty amount (which changes annually) by all full-time employees (reduced by the first 30 employees), whether or not those employees enroll in the Exchange.
2. **Penalty B**: If an ALE offers coverage to more than 95% of their full-time employees but fails to offer affordable, minimum value coverage to all full-time employees, they may be subject to a “B” penalty. The B penalty is triggered if a full-time employee is not offered affordable minimum value coverage (i.e., they are offered unaffordable coverage or coverage that does not meet minimum value) and they receive a premium subsidy for enrolling onto the Exchange for any calendar month. The B penalty is determined by multiplying the penalty amount (which changes annually) by the number of employees who receive subsidized coverage on the Exchange (it is not based on the total number of full-time employees like the “A” penalty).

The current 2025 penalties are as follows:

|     |     |
| --- | --- |
|  | **2025** |
| **Penalty A** | $241.67/month<br>($2,900 annualized) |
| **Penalty B** | $362.50/month<br>($4,350 annualized) |

**How does the IRS determine whether an employer owes a penalty?**

To determine whether an employer owes a penalty, the IRS compares the employer’s ACA reporting with the list of employees who received a government subsidy to purchase coverage through the Exchange. Penalties are triggered if an employer fails to offer a full-time employee proper coverage and that employee receives a government subsidy for Exchange coverage.

If an employer is subject to a penalty, the IRS will send the employer a 226J Notice letter outlining how much the IRS believes the employer owes.

## Employer Action

- ALEs should be aware of the 2026 affordability rates when determining their group health plan offerings and contribution strategies for the upcoming 2026 plan year.
- ALEs should ensure their group health plan is affordable under one of the affordability safe harbors (FPL, Rate of Pay, or W-2).

## Additional Resources

- [Rev. Proc. 2025-25](https://www.irs.gov/pub/irs-drop/rp-25-25.pdf)
- [HHS Federal Poverty Level](https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines)

\]\]>Why Employers Can’t Ignore GLP-1s, Caregiving, and Mental Health Supporthttps://www.sequoia.com/2025/07/why-employers-cant-ignore-glp1-caregiving-and-mental-health/

Thu, 24 Jul 2025 15:32:44 +0000https://www.sequoia.com/?p=56943Employee health priorities are changing. Learn why GLP-1s, caregiving, and personalized mental health support are driving new benefit strategies.

The post [Why Employers Can’t Ignore GLP-1s, Caregiving, and Mental Health Support](/content/2025/07/why-employers-cant-ignore-glp1-caregiving-and-mental-health/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

As healthcare costs continue to climb, growing companies are feeling the pressure to balance financial sustainability with meaningful employee support. At the same time, hybrid work models and increasingly diverse workforces are reshaping what employees expect from their benefits. In this environment, wellbeing is no longer a nice-to-have, it’s a key lever for attracting talent, improving retention, and managing long-term healthcare spend.

According to Sequoia’s [2025 Wellbeing Trends report](/content/resources/insights-reports/2025-wellbeing-trends-report/index.html), two themes are dominating the conversation about wellbeing benefits:

- The rising cost and complexity of GLP-1 medications for weight loss and other chronic conditions
- The growing demand for inclusive, family-forward support in a hybrid work environment

Yet many benefit programs still reflect a one-size-fits-all model that leaves critical gaps, especially for caregivers, neurodivergent individuals, and those managing chronic health conditions like obesity. Below, we’ll review why these topics are important for both employees and employers and highlight companies that are helping to address these changes.

## The Rising Cost and Complexity of GLP-1 Medications

GLP-1 medications like Ozempic and Wegovy have become central to weight loss and chronic disease management strategies, but [their rising costs](/content/2025/04/glp1-costs-strategies/index.html) are straining employer-sponsored health plans.

According to Sequoia’s report, 26% of employers are covering GLP-1s for weight loss, with 20% of those offering, or planning to offer, a third-party program to manage costs. [These drugs can cost](https://www.forbes.com/sites/joshuacohen/2025/03/17/at-current-prices-glp-1s-arent-cost-effective-limiting-access-to-patients/) between $6,200 and $8,400 annually per employee and are not considered cost-effective at current prices. This financial pressure is prompting benefits leaders to rethink how GLP-1s fit into broader chronic condition strategies, especially given the risk of weight regain after discontinuation.

**Related article:** [How Employers Can Contain GLP-1 Costs in Their Health Plans](/content/2025/04/glp1-costs-strategies/index.html)

## The Demand for Inclusive Support for Individuals and Families in a Hybrid World

As employers push for a return to the office, employees, especially working parents, are voicing a need for stronger childcare and caregiving support. [According to McKinsey](https://www.mckinsey.com/featured-insights/sustainable-inclusive-growth/future-of-america/the-childcare-conundrum-how-can-companies-ease-working-parents-return-to-the-office), 45% of mothers with children under five who left the workforce during the pandemic cited lack of childcare as a primary reason, and 24% considered reducing their hours or shifting to part-time roles. Sequoia’s report echoes this shift, with a growing number of employers expanding benefits like childcare, childcare reimbursements, and eldercare to support family needs. For HR leaders, addressing these demands is not just about flexibility, it’s about retaining mid-tenure talent and ensuring workforce resilience in a post-pandemic world.

The return to the office also highlights the needs of neurodiverse employees. It’s estimated that [approximately 15-20% of the population](https://pmc.ncbi.nlm.nih.gov/articles/PMC7732033/) is neurodivergent. Employers can create a work environment that allows all individuals to feel comfortable, engaged, and celebrated through educational resources, benefits for neurodivergent employees, and training for managers to support diverse teams.

## Closing the Gaps

Found, UrbanSitter, and Joshin — Sequoia’s newest partners — are among the companies supporting these employee needs. Here’s how:

#### Found

[Found](https://joinfound.com/?srsltid=AfmBOopzP-EljR9kb7pyt9T9O5O42AR0AYc09-WcdgNr8XBXY9xpW8Qs) is one of the largest telehealth weight care providers in the US, with over one million clinical consults. Its program combines GLP-1 and non-GLP-1 medications with clinical care, nutritional guidance, behavioral support, and lifestyle coaching, helping members achieve sustainable outcomes while delivering measurable ROI for employers.

“Found was built to help employers tackle the complex challenge of weight care in a way that’s clinically effective, financially sustainable, and accessible to all,” said Found Chief Revenue Officer, Rob Watson. “As GLP-1 utilization rises, employers need more than just a prescription, they need a long-term strategy. That’s where we come in.”

#### UrbanSitter

[UrbanSitter](https://www.urbansitter.com/) helps working parents find trusted childcare. From in-home caregivers to a nationwide network of daycare and preschool centers, they can find the care they need when and where they need it — leading to fewer missed workdays, smoother returns from parental leave, and lower stress all around.

“When employees can’t find trusted care for their loved ones — especially at the last minute —it affects their focus, productivity, and well-being,” said Urban Sitter CEO and Co-founder, Lynn Perkins. “UrbanSitter was built to solve this challenge, giving working families peace of mind and giving employers a proven way to boost morale, reduce absenteeism, and retain top talent.”

#### Joshin

[Joshin](https://joshin.com/) is a comprehensive solution for neurodivergence and disability, supporting individuals, caregivers, and managers alike. Through personalized navigation, 1:1 coaching, and community-specific resources, Joshin helps create more inclusive workplaces where all employees can thrive.

“Traditional benefits and workplaces weren’t designed with neurodivergence and disability in mind,” said Joshin Co-founder and COO, Melanie Fountaine.” Joshin addresses this problem through community-driven resources built by those with lived experience.”

## Need Help Supporting Your Employees’ Wellbeing?

Sequoia helps employers deliver comprehensive wellbeing support that’s easy to implement, manage, and scale.

With partners like One Medical, Peloton, Headspace, and Carrot also in the mix [we help companies](/content/client-success/matterport/index.html) meet the physical, emotional, and family needs of their people, without the administrative burden of managing multiple vendors.

Want to learn more about how Sequoia can support your organization? Contact us at [wellbeing@sequoia.com](mailto:wellbeing@sequoia.com) to learn more.

\]\]>HIPAA Enforcement in 2025: Increased Focus on Security Risk Analysishttps://www.sequoia.com/2025/07/hipaa-enforcement-in-2025-increased-focus-on-security-risk-analysis/

Tue, 22 Jul 2025 19:39:36 +0000https://www.sequoia.com/?p=56927In 2025, the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) has intensified its enforcement of the Health Insurance Portability and Accountability Act (HIPAA) Security Rule, placing significant emphasis on the requirement for covered entities and business associates to conduct a comprehensive risk analysis. Since launching its Risk Analysis Initiative in October 2024, the OCR has already entered into several resolution agreements -- signaling a clear shift toward proactive enforcement and greater accountability for noncompliance.

The post [HIPAA Enforcement in 2025: Increased Focus on Security Risk Analysis](/content/2025/07/hipaa-enforcement-in-2025-increased-focus-on-security-risk-analysis/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

In 2025, the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) has intensified its enforcement of the Health Insurance Portability and Accountability Act (HIPAA) Security Rule, placing significant emphasis on the requirement for covered entities and business associates to conduct a **comprehensive risk analysis**. Since launching its Risk Analysis Initiative in October 2024, the OCR has already entered into [several resolution agreements](https://www.hhs.gov/hipaa/for-professionals/compliance-enforcement/agreements/index.html) – signaling a clear shift toward proactive enforcement and greater accountability for noncompliance.

## The OCR’s Risk Analysis Initiative

The OCR’s recent initiative targets organizations that fail to conduct accurate and thorough assessments of the risks to electronic protected health information (ePHI). These enforcement actions have resulted in resolution agreements – formal settlement agreements between the OCR and a HIPAA-covered entity or business associate that include monetary penalties and multi-year Corrective Actions Plans (CAPs) with ongoing oversight.

While the reported security incidents involve different types of alleged violations – from ransomware to unsecured servers – the risk analysis requirement plays a central role in the OCR’s enforcement actions. Financial penalties tied to the resolution agreements ranged from $25,000 to $3 million—the highest was imposed on a national medical supplier that failed to conduct a compliant risk analysis and later experienced a significant data breach following a phishing attack. Other fines, typically in the five- to six-figure range, were levied against mid-sized providers and service companies. These enforcement outcomes reflect broader industry-wide gaps that the initiative aims to address.

The initiative was prompted by a 264% increase in large ransomware breaches since 2018, with many breaches linked to incomplete or outdated risk assessments. A 2016-2017 audit revealed that only 14% of covered entities were substantially fulfilling their risk analysis obligations. These trends, combined with the growing number of individuals affected by cyber incidents, highlight the critical need for HIPAA-regulated entities to proactively evaluate and strengthen their compliance with the HIPAA Security Rules.

## The HIPAA Security Risk Analysis Requirement

Conducting a risk analysis is not just a best practice – it’s a core requirement under the HIPAA Security Rule. This applies to all **covered entities** (such as healthcare providers, health plans, and healthcare clearing houses) and their **business associates** (vendors or subcontractors who handle protected health information on their behalf).

A compliant risk analysis involves:

- **Identifying** where ePHI is stored, received, maintained, or transmitted
- **Assessing** potential threats and vulnerabilities to the confidentiality, integrity, and availability of e PHI
- **Evaluating** the likelihood and impact of potential risks
- **Implementing** appropriate security measures to reduce risks to a reasonable and appropriate level
- **Reviewing** and updating the risk analysis regularly, especially after significant changes to operations or technology

Organizations that fail to perform an analysis not only face increased exposure to attacks, but significant financial penalties and heightened regulatory oversight.

## Recommended Actions for Employers

The OCR recommends that entities covered by HIPAA – including health care providers, health plans, clearinghouses, and business associates – take the following actions to mitigate or prevent cyber threats:

- **Review vendor and contractor relationships** to confirm that the appropriate business associate agreements are in place, and that they clearly define responsibilities related to breaches and security incidents.
- **Integrate risk analysis and risk management** into routine business operations. These assessments should be conducted regularly and whenever new technologies or business processes are introduced.
- **Implement audit controls** to monitor and evaluate activity within information systems.
- **Use multi-factor authentication (MFA)** to ensure that only authorized individuals can access electronic protected health information (ePHI).
- **Encrypt ePHI** to protect it from unauthorized access.
- **Apply lessons learned from past incidents** to strengthen the overall security management strategy.
- **Provide regular, role-specific training** to staff, emphasizing their essential role in maintaining privacy and security.

The OCR’s recent enforcement actions underscore the critical importance of completing a comprehensive HIPAA risk analysis. To support organizations in meeting this requirement, the OCR provides [official guidance](https://www.hhs.gov/hipaa/for-professionals/security/guidance/guidance-risk-analysis/index.html) along with a [Security Risk Assessment (SRA) Tool](https://www.healthit.gov/topic/privacy-security-and-hipaa/security-risk-assessment-tool), designed to help covered entities and business associates through the process.

While the SRA Tool can serve as a helpful starting point, HHS emphasizes that it is intended for informational purposes only. Organizations must still exercise their own judgment in assessing the likelihood, impact, and overall risk of specific threats and vulnerabilities. As such, HIPAA-regulated entities are strongly encouraged to consult with cybersecurity professionals and legal counsel for further support.

## Additional Resources

- [HHS Enforced HIPAA Compliance Resolution Agreements](https://www.hhs.gov/hipaa/for-professionals/compliance-enforcement/agreements/index.html)
- [HHS Guidance on Risk Analysis](https://www.hhs.gov/hipaa/for-professionals/security/guidance/guidance-risk-analysis/index.html)
- [OCR Security Risk Assessment Tool](https://www.healthit.gov/topic/privacy-security-and-hipaa/security-risk-assessment-tool)

\]\]>\[Updated\]: HIPAA Privacy Rule Amended to Support Reproductive Health Care Privacy: Employer Impacthttps://www.sequoia.com/2025/07/hipaa-privacy-rule-amended-to-support-reproductive-health-care-privacy-employer-impact-updated/

Fri, 18 Jul 2025 05:35:00 +0000https://www.sequoia.com/?p=50887Recently, the Department of Health and Human Services (HHS) published a Final Rule, HIPAA Privacy Rule to Support Reproductive Health Care Privacy, in response to the 2023 Notice of Proposed Rule Making and increased state abortion laws since the U.S. Supreme Court decision in Dobbs v. Jackson Women’s Health Organization. The Final Rule aims to strengthen the Health Insurance Portability Act of 1996 (HIPAA) Privacy Rule by prohibiting the disclosure of protected health information (PHI) related to lawful reproductive health care, described further below.

The post [\[Updated\]: HIPAA Privacy Rule Amended to Support Reproductive Health Care Privacy: Employer Impact](/content/2025/07/hipaa-privacy-rule-amended-to-support-reproductive-health-care-privacy-employer-impact-updated/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

**Update**: On June 18, 2025, the U.S. District Court for the Northern District of Texas issued a ruling in _Carmen Purl, et al. v. U.S. Department of Health and Human Services, et al._, striking down key portions of the HIPAA Privacy Rule to Support Reproductive Health Care Privacy. As a result, covered entities are no longer required to comply with portions of the Reproductive Health Rule, including the attestation process and updated policy requirement, staff training, and business associate agreements specific to reproductive health information (described below). HHS has also suspended enforcement actions for violations of the vacated provisions. Covered entities must still comply with the surviving Notice of Privacy Practices (NPP) requirements by February 16, 2026, as outlined below. HHS is expected to issue a revised model NPP before that deadline. In the meantime, covered entities must continue to comply with HIPAA’s Privacy Rule regarding the protection of PHI.

In light of the recent court decision, employers should:

- **Review and revise HIPAA documentation**: Update HIPAA policies, procedures, and training materials to re-align with pre-2024 Privacy Rule requirements, as the court vacated most of the 2024 changes , by:

- Removing references to the attestation process and related requirements from HIPAA policies, procedures, and training materials to reflect the vacated Final Rule; and
  - Revising Business Associate Agreements (BAAs) to eliminate any language referencing the attestation requirement, if previously included.
- **Update the NPP**: The NPP explains how protected health information (PHI) can be used or disclosed and outlines an individual’s rights regarding such PHI. Employers who updated their NPP in anticipation of the February 16, 2026, compliance deadline, should revise the Notice to remove any details and examples related to uses and disclosures associated with reproductive health care.

HHS will determine next steps after a thorough review of the court’s decision. Sequoia is closely monitoring developments and will share updates as additional guidance becomes available.

**Update**: The Department of Health and Human Services (HHS) released their [model attestation](https://www.hhs.gov/sites/default/files/model-attestation.pdf) to support compliance with the new attestation requirement under HIPAA, which mandates covered entities (and business associates) to ensure an attestation is obtained before disclosing PHI potentially related to reproductive healthcare in certain circumstances (effective December 23, 2024), described further below. Covered entities may, but are not required, to use to use the model attestation. If covered entities choose to develop their own attestation form with the assistance of counsel, they should note the attestation cannot be combined with any other document and has certain content requirements, such as:

- a description of the information requested, including the name of any individual(s) whose PHI is sought or if not practicable, a description of the class of individuals whose PHI is sought;
- the name or other specific identification of the person(s), or class of persons, who are requested to make the use or disclosure; and to whom the covered entity is to make the request;
- a clear statement that the use or disclosure is not for a prohibited purpose;
- a statement that a person may be subject to criminal penalties if that person knowingly and in violation of HIPAA obtains individually identifiable health information relating to an individual or discloses individually identifiable health information to another person; and
- the signature of the person requesting the protected health information, which may be an electronic signature, and the date.

**Original Article:**

Recently, HHS published a [Final Rule](https://www.govinfo.gov/content/pkg/FR-2024-04-26/pdf/2024-08503.pdf), _HIPAA Privacy Rule to Support Reproductive Health Care Privacy_, in response to the [2023 Notice of Proposed Rule Making](https://public-inspection.federalregister.gov/2023-07517.pdf) and increased state abortion laws since the U.S. Supreme Court decision in _Dobbs v. Jackson Women’s Health Organization_. The Final Rule aims to strengthen the Health Insurance Portability Act of 1996 (HIPAA) Privacy Rule by prohibiting the disclosure of protected health information (PHI) related to lawful reproductive health care, described further below.

## Compliance Snapshot

- The [Final Rule](https://www.govinfo.gov/content/pkg/FR-2024-04-26/pdf/2024-08503.pdf) provides protection for individuals who receive reproductive health care when the care is provided lawfully, without risk of an individual’s identity or health information being disclosed for purposes of state criminal, civil or administrative investigations. **\[now vacated\]**
- An attestation will be required prior to certain disclosures to confirm that the request is not for an improper purpose, effective **beginning December 23, 2024**. **\[now vacated\]**
- Covered entities, including employer sponsors of self-insured group health plans and insurers, will need to update their Notice of Privacy Practices (NPP) **by February 16, 2026**, to include these new protections.

## Final Rule: Overview \[now vacated\]

Per the [fact sheet](https://www.hhs.gov/hipaa/for-professionals/special-topics/reproductive-health/final-rule-fact-sheet/index.html), the Final Rule prohibits “the use or disclosure of PHI by a covered health care provider, health plan, or health care clearinghouse—or their business associate—for either of the following activities:

1. To conduct a criminal, civil, or administrative investigation into or impose criminal, civil, or administrative liability on any person for the mere act of seeking, obtaining, providing, or facilitating reproductive health care, where such health care is lawful under the circumstances in which it is provided.
2. The identification of any person for the purpose of conducting such investigation or imposing such liability.

Under the Final Rule, the prohibition applies where a covered health care provider, health plan, or health care clearinghouse ( [covered entities](https://www.hhs.gov/hipaa/for-professionals/covered-entities/index.html)) or [business associate](https://www.hhs.gov/hipaa/for-professionals/privacy/guidance/business-associates/index.html) (collectively, “regulated entities”) has reasonably determined that one or more of the following conditions exists:

1. The reproductive health care is lawful under the law of the state in which such health care is provided under the circumstances in which it is provided.
   - For example, if a resident of one state traveled to another state to receive reproductive health care, such as an abortion, that is lawful in the state where such health care was provided.
2. The reproductive health care is protected, required, or authorized by Federal law, including the U.S. Constitution, regardless of the state in which such health care is provided.
   - For example, if use of the reproductive health care, such as contraception, is protected by the Constitution.
3. The reproductive health care was provided by a person other than the covered health care provider, health plan, or health care clearinghouse (or business associates) that receives the request for PHI and the presumption described below applies.”

## Attestation Requirement & HIPAA Notice of Privacy Practices Updates

**\[Now vacated\]** In addition to the above prohibition, the [Final Rule](https://www.govinfo.gov/content/pkg/FR-2024-04-26/pdf/2024-08503.pdf) requires covered entities (e.g., a group health plan, or its business associates) to obtain an attestation signed by the requestor, noting that such use or disclosure is not prohibited under the final rule. An attestation will apply when requesting PHI for health oversight activities; judicial and administrative proceedings; law enforcement purposes; or disclosures to coroners and medical examiners. _HHS intends to publish model attestation language before the effective date of this provision, which is December 23, 2024._

**\[Requirement Remains\]** Effective beginning February 16, 2026, group health plans and issuers must have an updated NPP which includes a description (and examples) of the prohibited uses and disclosures of PHI and when an attestation is necessary, among other requirements, as explained further in the [Final Rule](https://www.govinfo.gov/content/pkg/FR-2024-04-26/pdf/2024-08503.pdf). _It is anticipated that HHS will publish an updated model Notices of Privacy Practices in advance of the effective date of this provision_.

_Employers who work with Sequoia should note that any related resources will be timely updated to comply with the Final Rule._

## Employer Action

While the [Final Rule](https://www.govinfo.gov/content/pkg/FR-2024-04-26/pdf/2024-08503.pdf) is effective on June 25, 2024, group health plans (and other covered entities) and their business associates will be required to comply with these requirements by December 23, 2024, with updates to the NPP required by February 16, 2026. That said, employers should do the following, dependent on their plan type:

- **Self-insured/level funded group health plans**:

- By **December 23, 2024**, plan sponsors should ensure an attestation is obtained before disclosing PHI in the circumstances described above; review and update their HIPAA Policies and Procedures and business associate agreements (BAAs) to ensure the terms comply with the [Final Rule](https://www.govinfo.gov/content/pkg/FR-2024-04-26/pdf/2024-08503.pdf); and update employee HIPAA trainings to address this new prohibition. _In light of the recent court decision, employers should update HIPAA policies, procedures, and training materials to align with pre-2024 Privacy Rule requirements, as the court vacated these requirements._
  - By **February 16, 2026**, plan sponsors should update their NPP to comply with the [Final Rule](https://www.govinfo.gov/content/pkg/FR-2024-04-26/pdf/2024-08503.pdf) and distribute the updated NPP to participants.
- **Fully insured group health plans**: By **February 16, 2026**, plan sponsors should confirm with their carriers that they updated their NPP to comply with the [Final Rule](https://www.govinfo.gov/content/pkg/FR-2024-04-26/pdf/2024-08503.pdf), and that the updated NPP has been distributed to participants.

Sequoia will continue to monitor for further guidance as HHS develops its model attestation and updates to the model NPP.

## Additional Resources

- [HIPAA Privacy Rule to Support Reproductive Health Care Privacy](https://www.govinfo.gov/content/pkg/FR-2024-04-26/pdf/2024-08503.pdf)
- [HIPAA Privacy Rule Final Rule: Fact Sheet](https://www.hhs.gov/hipaa/for-professionals/special-topics/reproductive-health/final-rule-fact-sheet/index.html)
- [HIPAA Privacy Rule Final Rule: Press Release](https://www.hhs.gov/about/news/2024/04/22/biden-harris-administration-issues-new-rule-support-reproductive-health-care-privacy-under-hipaa.html)
- [Model Attestation](https://www.hhs.gov/sites/default/files/model-attestation.pdf)
- Sequoia Foreword:
  - [One Year Later: Status of Reproductive Healthcare Coverage Since Dobbs v. Jackson](/content/2023/08/status-of-reproductive-healthcare-coverage-since-dobbs-v-jackson/index.html)
  - [Supreme Court Decision Overturns Roe vs. Wade, Impact to Employer Benefit Plans](/content/2022/07/draft-supreme-court-opinion-leak-impact-to-employer-benefit-plans/index.html)

\]\]>New York Regulations Promote Network Adequacy for Mental Health Serviceshttps://www.sequoia.com/2025/07/new-york-regulations-promote-network-adequacy-for-mental-health-services/

Thu, 10 Jul 2025 15:20:16 +0000https://www.sequoia.com/?p=56884The New York State Department of Financial Services (DFS) and the Department of Health (DOH) have recently adopted 'network adequacy' regulations requiring health plans to enhance access to mental health and substance use disorder services. Importantly, the DFS regulation applies to fully insured health insurance plans written in New York (while the mirrored DOH regulations apply to HMOs, including Medicaid managed care plans). These ‘network adequacy’ regulations do not apply to self-funded plans or fully insured plans issued outside of New York.

The post [New York Regulations Promote Network Adequacy for Mental Health Services](/content/2025/07/new-york-regulations-promote-network-adequacy-for-mental-health-services/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

The New York State Department of Financial Services (DFS) and the Department of Health (DOH) have recently adopted ‘network adequacy’ regulations requiring health plans to enhance access to mental health and substance use disorder services. Importantly, the DFS regulation applies to fully insured health insurance plans written in New York (while the mirrored DOH regulations apply to HMOs, including Medicaid managed care plans). These ‘network adequacy’ regulations do not apply to self-funded plans or fully insured plans issued outside of New York.

The new regulations, which take effect on July 1, 2025, will require a plan to:

- Provide an initial behavioral health appointment within 10 business days of a member’s request, or within seven calendar days following discharge from a hospital or emergency room. If in-network providers are unavailable within these timeframes, the plan must authorize access to an out-of-network provider at the in-network cost-sharing rate;
- Update provider directories with practice locations, provider affiliations, and any restrictions on scope of services; and
- Maintain compliance through an ‘access plan,’ outlining protocols for ensuring behavioral health access and monitoring provider capacity. Written certification of compliance is required by carriers annually, with the first report due by December 31, 2026.

## Employer Takeaways

Although the ‘network adequacy’ rules do not require direct employer action, employers should stay informed. Employers sponsoring fully insured group health plans issued in New York may wish to confirm with their carriers that their plans comply with the updated standards for plans issued or renewed on or after July 1, 2025.

## Additional Resources

- [NY DFS Insurance Regulation 230](https://www.dfs.ny.gov/system/files/documents/2025/02/rf-ins-reg230-text.pdf)
- [NY Public Health Law Part 98](https://www.health.ny.gov/health_care/managed_care/docs/10_nycrr_98-5.pdf)

\]\]>Updated: One Big Beautiful Bill Act: Employer Health Plan Impacthttps://www.sequoia.com/2025/07/one-big-beautiful-bill-act-employer-health-plan-impact-updated/

Tue, 08 Jul 2025 17:48:10 +0000https://www.sequoia.com/?p=56849On July 4, 2025, the One Big Beautiful Bill Act (OBBB) was signed into Law by President Trump. The initial legislation, first passed in the House, included numerous provisions that intended to expand pre-tax benefits for employees and employer options for offering healthcare plans to employees. In the end, the House approved a pared down Senate version of the Bill, just in time for the President’s self-imposed deadline. While the bill includes many changes to ACA premium tax credits and their availability to individuals in the Marketplace, the below focuses on the provisions that will impact employers and their benefit plan offerings.

The post [Updated: One Big Beautiful Bill Act: Employer Health Plan Impact](/content/2025/07/one-big-beautiful-bill-act-employer-health-plan-impact-updated/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

On July 4, 2025, the [One Big Beautiful Bill Act](https://www.congress.gov/119/bills/hr1/BILLS-119hr1eas.pdf) (OBBB) was signed into Law by President Trump. The initial legislation, first passed in the House, included numerous provisions that intended to expand pre-tax benefits for employees and employer options for offering healthcare plans to employees. In the end, the House approved a pared down Senate version of the Bill, just in time for the President’s self-imposed deadline. While the bill includes many changes to ACA premium tax credits and their availability to individuals in the Marketplace, the below focuses on the provisions that will impact employers and their benefit plan offerings.

## Health Savings Accounts (HSAs) Eligibility

_High-Deductible Health Plans (HDHPs) and Telehealth Services_

The final version of the bill **makes permanent** the COVID-era safe harbor that allows HDHP coverage of telehealth services at low or no cost prior to satisfying the plan deductible in order to preserve HSA eligibility for plan participants. For more information on prior telehealth relief, see our article, [_Telehealth Relief Extension Expires for Plans Starting on or after January 1, 2025_](/content/2024/12/telehealth-relief-extension-expires-plans-starting-on-or-after-january012025/index.html).

This provision is effective **retroactive for plan years beginning on or after 12/31/24**, therefore making telehealth services available with low or no cost-sharing prior to meeting the deductible for existing plan members of an HDHP without eliminating their eligibility to contribute to an HSA going forward.

_Direct Primacy Care Service Arrangements (DPC)_

Effective beginning 1/1/2026, DPC arrangements will not be treated as disqualifying coverage impacting HSA eligibility. The provision in the bill is limited to DPC arrangements wherein primary care services are provided by primary care practitioners for a fixed periodic fee that does not exceed a monthly cost of $150 per individual or $300 for plans that include spouses and dependents. In addition, the bill clarifies that DPC fees are a qualified medical expense under IRC Section 213(d), and as such, they are eligible to be paid tax-free from an HSA.

As background, a DPC arrangement is a healthcare model where individuals (or sometimes employers) pay a flat, recurring membership fee directly to a primary care provider in exchange for certain medical care. A DPC arrangement can cover services (e.g., urgent care, chronic disease management) that an HDHP can only cover once the deductible is met. Before this guidance, it was not entirely clear how DPC coverage affected HSA eligibility—but it was often considered disqualifying coverage due to the offering of first-dollar coverage.

_Marketplace Bronze and Catastrophic Plans_

All Bronze and Catastrophic level plans (offered in the individual market) beginning on or after December 31, 2025, will now be permitted as HSA-compatible HDHPs, even though these plans provide first dollar coverage for some benefits. This expands the availability for employees enrolled in these plans (who are otherwise HSA eligible) to now contribute to an HSA that they have not been eligible to contribute to in the past. Note to be HSA eligible, an individual must be covered by a qualifying HDHP, have no disqualifying coverage, not be enrolled in Medicare, and not able to be claimed as a dependent on another person’s tax return.

_HSA Provisions that were **not Included** in the Final Bill_

Several notable provisions relating to HSAs originally presented in the House Bill were left out of the final legislation. As such, these provisions **were not** enacted into law:

- **Medicare Part A**: Individuals enrolled in Part A would remain HSA-eligible.
- **On-Site Clinics**: Access to limited on-site clinic services that would not disqualify HSA eligibility.
- **Fitness Expenses**: Up to $500/year for gym memberships and similar activities.
- **Catch-Up Contributions**: Both spouses could have made the $1,000 catch-up to the same HSA.
- **Spousal FSA**: HSA eligibility would remain even if a spouse had a general-purpose FSA.

## Dependent Care Flexible Spending Accounts (DCFSA) & Fringe Benefits

Starting January 1, 2026, the contribution limit for DCFSAs will increase from $5,000 to $7,500 ($3,750 for married couples filing separately). This limit, initially set almost 40 years ago, is not indexed for inflation. While this is likely to be welcomed by employees, this increase could make it more difficult for plans to pass the already challenging 55% Average Benefits Non-Discrimination Test that must be performed each plan year. This is because the 55% Average Benefits test is based on utilization and highly compensated employees tend to utilize these accounts more heavily.

## Employer Tax Credits

In addition, several provisions within the bill will extend permanent tax credits for employers offering specific benefits from previous legislation that were set to expire in the coming months. These tax credits include but are not limited to:

- [Employer reimbursements for student loans](/content/2023/01/student-loan-legislation-what-employers-need-to-know/index.html), which allows employers to provide up to $5,250 per year (indexed for inflation after 2026) in tax-free student loan repayment assistance through an educational assistance program. To qualify, the program must be established under a written plan, and employers must reasonably notify all eligible employees of its availability and terms.
- New tax-favored accounts (“Trump Accounts”) for children under age 18, effective for tax years beginning January 1, 2026 and beyond. These accounts allow up to $5,000 per year in pre-tax contributions (indexed for inflation), with employers permitted to contribute up to $2,500 tax-free annually. Modeled after IRAs, investments in these accounts grow tax-deferred, and distributions are generally restricted until the child turns 18.
- Paid Family and Medical Leave (PFML) credit (which makes the paid family and medical leave credit permanent and allows it to be claimed for an applicable percentage of premiums paid towards PFML insurance policies.)
- Employer-provided childcare credit (which increases the employer-provided child tax credit up to $500,000 on up to 40% of the employers qualified childcare expenses and indexes the amount of the credit for inflation.)

Finally, we note that the qualified bicycle commuting reimbursement was eliminated (though employers may still offer a bicycle reimbursement on a post-tax basis).

Employers should work with a qualified tax adviser to understand how they may take advantage of the above-named tax credits.

## Employer Action Items

Many of the bill’s provisions will not go into effect until after December 31, 2025. The retroactive provision related to HSAs and telehealth services will not negatively impact benefits, nor will it require any action from employees.

- **Telehealth**. Employers who wish to provide telehealth coverage without cost sharing should work with their carrier/vendor of third-party administrator to make any plan design changes and update plan documents (if changes are made).
- **DCFSAs**. Employers planning to adopt the increased Dependent Care FSA contribution limit should work with their FSA vendor to update Section 125 (cafeteria plan) documents, revise summary plan description documents, and ensure open enrollment communications and/or employee communications for the 2026 plan year reflect any changes.

- _Employers who consistently have issues passing the 55% Average Benefits Non-Discrimination Test should be mindful when deciding whether to increase the plan limit (which is a matter of plan design and not a required change). Employers may want to discuss this option further with their non-discrimination testing vendor before adopting plan changes._

## Additional Resources

- [H.R. 1 – One Big Beautiful Bill Act](https://www.congress.gov/119/bills/hr1/BILLS-119hr1eas.pdf)
- [IRS Publication 502 Medical and Dental Expenses](https://www.irs.gov/publications/p502)
- Sequoia Forewords
  - [Telehealth Relief Extension Expires for Plans Starting on or after January 1, 2025](/content/2024/12/telehealth-relief-extension-expires-plans-starting-on-or-after-january012025/index.html)
  - [Student Loan Legislation: What Employers Need to Know](/content/2023/01/student-loan-legislation-what-employers-need-to-know/index.html)

\]\]>\[Updated\] Executive Order Prioritizes Health Care Price Transparencyhttps://www.sequoia.com/2025/07/executive-order-prioritizes-health-care-price-transparency-updated/

Thu, 03 Jul 2025 05:52:00 +0000https://www.sequoia.com/?p=55376Recently, President Trump issued Executive Order 14221, Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information, directing the Departments of Treasury, Health and Human Services, and Labor (the “Departments”) to rapidly implement and enforce healthcare price transparency regulations pursuant to Executive Order 13877. The executive order furthers ongoing efforts to improve overall accountability of group health plans and insurers.

The post [\[Updated\] Executive Order Prioritizes Health Care Price Transparency](/content/2025/07/executive-order-prioritizes-health-care-price-transparency-updated/index.html) appeared first on [Sequoia](/content/site-root.html).

\]\]>

**Update**: The Centers for Medicare & Medicaid Services (CMS) have issued new [guidance](https://www.cms.gov/files/document/updated-hpt-guidance-encoding-allowed-amounts.pdf) for hospitals, as directed by President Trump’s Executive Orders discussed below. The update aims to ensure hospitals provide clear, accurate, and accessible pricing information for healthcare items and services. [FAQs Part 70](https://www.cms.gov/files/document/aca-faqs-part-70.pdf), released along with the new [guidance](https://www.cms.gov/files/document/updated-hpt-guidance-encoding-allowed-amounts.pdf), also provides technical details on how to publish pricing information. Highlights include:

- Hospitals must encode a standard charge dollar amount in the machine-readable file (MRF) if it can be calculated, including the amount negotiated for the item or service, the base rate negotiated for a service package, and a dollar amount if the standard charge is based on a percentage of a known fee schedule.
- Hospitals should discontinue encoding 999999999 (nine 9s) in the estimated allowed amount data element within the MRF and should instead encode an actual dollar amount.

For additional details and examples, see [CMS Updated Hospital Price Transparency Guidance](https://www.cms.gov/files/document/updated-hpt-guidance-encoding-allowed-amounts.pdf).

Original Article:

Recently, President Trump issued Executive Order 14221, [_Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information_](https://www.whitehouse.gov/presidential-actions/2025/02/making-america-healthy-again-by-empowering-patients-with-clear-accurate-and-actionable-healthcare-pricing-information/), directing the Departments of Treasury, Health and Human Services, and Labor (the “Departments”) to rapidly implement and enforce healthcare price transparency regulations pursuant to [Executive Order 13877](https://www.govinfo.gov/content/pkg/FR-2019-06-27/pdf/2019-13945.pdf). The executive order furthers ongoing efforts to improve overall accountability of group health plans and insurers.

As background, Executive Order 13877 was the catalyst for regulations requiring hospitals to publicly post the cost of common items and services (including negotiated rates and charges for services, supplies, and fees provided by the hospital or employees of the hospital); health plans to post negotiated rates with providers as well as out-of-network payments to providers and the actual prices paid for prescription drugs; and health plans to maintain a consumer-facing internet tool wherein individuals can access price information. For more details on Executive Order 13877, see our prior blog, [Executive Order Signed Promoting Transparency in Prices and Quality of Health Care](/content/2019/06/executive-order-price-quality-transparency-health-care/index.html).

Aiming to empower individuals to make informed healthcare decisions and ultimately reduce healthcare spending for all (consumers, employers, and insurers alike), the new executive order requires the Departments to take the following action:

- Disclose actual prices (not estimates) of items and services; and
- Issue updated guidance (or proposed regulatory action) that:
  - Ensures pricing information is standardized and easily comparable across hospitals and health plans; and
  - Updates enforcement policies designed to ensure compliance with the transparent reporting of complete, accurate, and meaningful data.

## Employer Takeaways

Executive orders do not make any immediate changes to the law but rather direct the Departments to issue various regulations and guidance in the future. That said, the Departments have 90 days from the date of the Executive Order to take action (by May 26, 2025) and as such, we expect to see revisions and rulemaking aligned with the directives of the executive order in the near future.

Employer plan sponsors should not begin to implement changes until additional agency guidance is published with an explanation of any required action. Sequoia will continue to monitor this information closely and will communicate updates on further legislative & regulatory developments.

## Additional Resources

- [CMS Updated Hospital Price Transparency Guidance](https://www.cms.gov/files/document/updated-hpt-guidance-encoding-allowed-amounts.pdf)
- [FAQs Part 70](https://www.cms.gov/files/document/aca-faqs-part-70.pdf)
- Executive Order 14221: [Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information](https://www.whitehouse.gov/presidential-actions/2025/02/making-america-healthy-again-by-empowering-patients-with-clear-accurate-and-actionable-healthcare-pricing-information/)
- Fact Sheet: [President Donald J. Trump Announces Actions to Make Healthcare Prices Transparent](https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-announces-actions-to-make-healthcare-prices-transparent/)
- Executive Order 13877: [Improving Price and Quality Transparency in American Healthcare to Put Patients First](https://www.govinfo.gov/content/pkg/FR-2019-06-27/pdf/2019-13945.pdf)
- Sequoia Foreword: [Executive Order Signed Promoting Transparency in Prices and Quality of Health Care](/content/2019/06/executive-order-price-quality-transparency-health-care/index.html)

\]\]>Updated: California Mandates Infertility and IVF Coveragehttps://www.sequoia.com/2025/07/california-mandates-infertility-ivf-coverage-updated/

Tue, 01 Jul 2025 03:00:00 +0000https://www.sequoia.com/?p=52517On September 29, 2024, California Governor Gavin Newsom signed bill SB 729 into law, which requires fully insured, large group health plans to cover infertility treatment and in-vitro fertilization (IVF) in insurance contracts and policies that are issued, amended, or renewed on or after July 1, 2025. The law will also expand the definition of infertility to be more inclusive of LGBTQ+ individuals looking to start a family.

The post [Updated: California Mandates Infertility and IVF Coverage](/content/2025/07/california-mandates-infertility-ivf-coverage-updated/index.html) appeared first on [Sequoia](/content/site-root.html).

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Last updated: January 28, 2026

Originally published October 4, 2024

**Update**: On June 30th, Governor Newsom signed [AB 116](https://legiscan.com/CA/text/AB116/id/3259528), the health omnibus bill, as part of the 2025-2026 state budget. It includes a provision to delay the implementation of SB 729 to **January 1, 2026** (originally to take effect July 1, 2025).

On September 29, 2024, California Governor Gavin Newsom signed bill [SB 729](https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB729) into law, which requires fully insured, large group health plans to cover infertility treatment and in-vitro fertilization (IVF) in insurance contracts and policies that are issued, amended, or renewed on or after **July 1, 2025** (now delayed to January 1, 2026 per [AB 116](https://legiscan.com/CA/text/AB116/id/3259528)). The law will also expand the definition of infertility to be more inclusive of LGBTQ+ individuals looking to start a family.

## Mandated IVF Coverage

Under current California law, insurance carriers are required to _offer_ employers the option to add infertility treatment to their plan. The current mandate to offer this coverage does not require carriers to include IVF treatment in the offer.

SB 729 will drastically change carrier requirements by mandating large group health plans (those covering at least 101 covered employees) to provide coverage for the diagnosis and treatment of infertility and fertility services, including IVF, with a maximum of three (3) completed oocyte retrievals and unlimited embryo transfers.

Per SB 729, “coverage for the treatment of infertility and fertility services shall be provided without discrimination on the basis of age, ancestry, color, disability, domestic partner status, gender, gender expression, gender identity, genetic information, marital status, national origin, race, religion, sex, or sexual orientation.” At this time, it is unclear if coverage for biological donor materials, gestational carriers or surrogacy services, or medical costs for using gestational carriers or surrogates would be required.

The law also prohibits a policy from including:

- Any exclusion, limitation, or other restriction on coverage of fertility medications that are different from those imposed on other prescription medications.
- Any exclusion or denial of coverage of any fertility services based on a covered individual’s participation in fertility services provided by or to a third party. For purposes of this section, “third party” includes an oocyte, sperm, or embryo donor, gestational carrier, or surrogate that enables an intended recipient to become a parent.
- Any deductible, copayment, coinsurance, benefit maximum, waiting period, or any other limitation on coverage for the diagnosis and treatment of infertility, except as provided in subdivision (a)\* that are different from those imposed upon benefits for services not related to infertility.

_\*Subdivision (a) provides, specific to a large group health care service plan, that it shall provide coverage for the diagnosis and treatment of infertility and fertility services, including a maximum of three completed oocyte retrievals with unlimited embryo transfers, using single embryo transfer when recommended and medically appropriate._

It is important to highlight that the law does not impose this coverage mandate on small group plans. Rather, carriers of small group plans must _offer_ employers the option to add coverage for the diagnosis and treatment of infertility and fertility services, including IVF.

In addition, both large group and small group plans are prohibited from imposing different coverage limitations or cost sharing on infertility diagnosis or treatment, as compared to other treatment unrelated to infertility.

## Revised Definition of Infertility

The law also expands the definition of infertility to include a condition or status characterized by any of the following:

- A licensed physician’s findings, based on a patient’s medical, sexual, and reproductive history, age, physical findings, diagnostic testing, or any combination of those factors.
- A person’s inability to reproduce either as an individual or with their partner without medical intervention.
- The failure to establish a pregnancy or to carry a pregnancy to live birth after regular, unprotected sexual intercourse (i.e., no more than 12 months of unprotected sexual intercourse for a person under 35 years of age or no more than 6 months of unprotected sexual intercourse for a person 35 years of age or older).

## Exceptions

- Generally, SB 729 applies to fully insured plans written out of California (i.e., subject to California insurance law). The mandate would not apply to level funded and self-insured plans, as these plans are not subject to state insurance regulations.
- SB 729 also explicitly states that it does not apply to religious employers, as defined in Section 1367.25 of the California Health and Safety Code.

## Impact on Employers

Employers with fully insured large group health plans written out of California should expect policies renewed on or after January 1, 2026, to incorporate the mandated coverage. It is also expected that this newly mandated coverage will have an effect on healthcare premiums, meaning employers are likely to see an increase in plan cost.

Employers with fully insured small group health plans written out of California will have the option to choose plans with IVF coverage and should determine whether they will want to offer these additional benefits to their employees and/or how the additional benefits will affect their healthcare premiums.

_\*Subdivision (a) provides, specific to a large group health care service plan, that it shall provide coverage for the diagnosis and treatment of infertility and fertility services, including a maximum of three completed oocyte retrievals with unlimited embryo transfers, using single embryo transfer when recommended and medically appropriate_.

## Additional Resources

- [SB729: Health care coverage: treatment for infertility and fertility services](https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB729)

[Connect with a Sequoia consultant](/content/form/consultation/index.html) to learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions.

And if you’re already a Sequoia client, stay on top of your employer obligations with [your Compliance Checklist](https://admin.sequoia.com/connect) that highlights important compliance dates, action items, and resources.

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